what is income elasticity 
income elasticity of demand is a measure of how demand for a particular product or service will rise as income rises luxury products for example have a higher elasticity of demand than so called normal goods like food some items referred to by economists as inferior goods see a decline in demand as income rises the bottom lineengel s law states that as a household s or a nation s income rises the percentage of income spent on food decreases and the percentage spent on other goods and services increases developed in the mid 19th century by the german statistician ernst engel it remains influential in economics and public policy today 