In economics, an Engel curve shows how a consumer’s demand for a good changes as income changes.
The curve is named after German statistician Ernst Engel, who published research on household spending in the nineteenth century. An Engel curve can plot the quantity demanded or the share of income spent on a product against income, while prices and other relevant conditions are held constant.
For a normal good, demand generally rises as income rises. For an inferior good, demand can fall as consumers switch to preferred alternatives. Food staples often take a declining share of household budgets as income grows, even when the absolute amount spent on food increases.
An Engel curve differs from an income elasticity measure. Elasticity gives a numerical percentage response; the curve provides a graphical description of the income-demand relationship.