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MENTAL MODEL · M2309

Engel's Law

Engel's Law
BusinessHigh supportMicroeconomics
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Version 1.0.0 · Updated 2026-07-30

CORE DEFINITION

As household income increases, the proportion of food expenditure to total expenditure (Engel's coefficient) decreases.

SCAFFOLDING EFFECT

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- Affluence yardstick: the most hardcore indicator of a family's or country's wealth. If you spend half of your income on food, you are at the poverty line; if it's only 10%, you are affluent.

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Engel's coefficient: the proportion of food expenditure to total consumption expenditure decreases as income rises, so a lower coefficient generally indicates greater affluence; it measures living standards and consumption structure.

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Source support: Explicit

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    en.wikipedia.orghttps://en.wikipedia.org/wiki/Engel%27s_lawZH · Explicit
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