In economics, what is the percentage change in quantity demanded divided by the percentage change in income called?

Income elasticity of demand is the percentage change in quantity demanded divided by the percentage change in consumer income.

The measure shows how demand responds when purchasing power changes, holding other relevant conditions constant. A positive value usually indicates a normal good: demand rises as income rises. A negative value indicates an inferior good, whose demand may fall as consumers switch to preferred alternatives. A value greater than one suggests demand is income-elastic.

The measure is distinct from price elasticity of demand, which compares quantity demanded with the good’s own price. Cross-price elasticity compares demand for one good with the price of another good, helping identify substitutes and complements.

Income elasticity can vary across income levels, countries, and time. Restaurant meals, private travel, and luxury products may have high positive income elasticity, while basic necessities often have lower positive values. Statistical estimates depend on the data, the time period, and whether researchers measure total spending or physical quantities.