Demand for Consumer Goods: A Summary

This chapter presents an overall summary of the conclusions about the consumption patterns of individual consumer goods as well as groups of goods. The comprehensive cross-country analysis presented in this book provides convincing evidence regarding the consumption patterns of consumer goods. An overview of the basic data for food shows that, at sample means, while consumers in the developing countries allocate about one-fourth of their income on food, consumers from developed countries allocate less than one-seventh of their income on food. Analysis of the relationship between food budget share and income for select countries identified an approximate inverse linear relationship between the two variables, supporting the well-known Engel’s Law, which states that the budget share for food falls with increasing income. A plot of the relative consumption of food against the relative price of food for select countries shows an approximate negative linear relationship supporting the basic law in economics, the law of demand.