Back to Engel? Some evidence for the hierarchy of needs
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Using UK household expenditure data spanning over four decades (1960-2000), this paper employs Engel's needs-based approach to analyzing household expenditure patterns and finds evidence for the existence of a stable hierarchy of expenditure patterns at low levels of household income. Second, we investigate how rising household income influences the manner in which total expenditure is distributed across Engel's expenditure categories. Our results suggest that i) total household expenditure is distributed across Engel's expenditure categories in an increasingly even manner as household income increases and ii) over time, there has been an acceleration in the rate at which household expenditure patterns become diversified as household income rises. Finally, we consider how the shape of Engel Curves may help shed light on the relationship between goods and the underlying needs they serve.
Journal of Evolutionary Economics
© 2012 Springer Berlin Heidelberg. This is an electronic version of an article published in Journal of Evolutionary Economics, September 2012, Volume 22, Issue 4, pp 649-676. Journal of Evolutionary Economics is available online at: http://link.springer.com/ with the open URL of your article.