Induced consumption
Consumption that varies with income
Induced consumption is the portion of consumption that varies with disposable income.[1] When a change in disposable income “induces” a change in consumption on goods and services, then that changed consumption is called “induced consumption”. In contrast, expenditures for autonomous consumption do not vary with income. For instance, expenditure on a consumable that is considered a normal good would be considered to be induced.
In the simple linear consumption function,[2]
induced consumption is represented by the term , where denotes disposable income and is called the marginal propensity to consume.
See also
- Lifestyle creep
- Diderot effect
- Induced demand
References
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Consumer behaviour
- Consumption
- Autonomous consumption
- Induced consumption
- Consumer culture theory
- Consumer debt
- Consumer economy
- Consumer spending
- Consumer choice
- Consumer economics
- Consumer neuroscience
- Consumer product
- Marketing research
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