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Ernst Engel



ThesynonymEngel(Germanstatistician)generallyreferstoErnstEngel

Characterintroduction

Engel,borninDresden,Germanstatistician,famousforEngel'slaw.Inhisearlyyears,hehadacloserelationshipwiththeFrenchsociologistFrédéricLePlay.LePlaywasveryinterestedinfamilyissues,whichledEngeltoconductaninvestigationofthefamily.TheexpendituredatacollectedinthesesurveysconvincedEngelthattherewasaconnectionbetweenthehousehold’sincomeandthehousehold’sexpenditureonfoodandotheritems.Thisisoneofthefirstquantitativefunctionalrelationshipsestablishedineconomics.Notonlythat,healsofoundthatfamilieswithhigherincomegenerallyspendmoreonfoodthanpoorerfamilies,buttheproportionoffoodexpenditureinthetotalbudgetisgenerallyinverselyproportionaltoincome.Startingfromthisempiricallaw,hefurtherdeducedthatintheprocessofeconomicdevelopment,comparedwithothereconomicsectors,agriculturewillshrink(Engel,1857).During1860-1882EngelwastheheadofthePrussianBureauofStatisticsinBerlin,andhedidalotofworkinthenameofthePrussianBureauofStatisticstodevelopandstrengthenofficialstatistics.HeresignedbecauseheopposedBismarck'sprotectionistpolicies.Inhisresearchwork,heespeciallystudiedthevalueofhumanlifefromthecostaspect.Healsoinvestigatedtheimpactofpricesondemand.HisinfluenceonofficialstatisticsisfarbeyondGermany.In1885heparticipatedinthefoundingoftheInternationalStatisticalSociety.HediedinRadebeulin1896.

Engel'scoefficient

Introduction

Accordingtostatisticaldata,ErnstEngeldrawsaruleforchangesinconsumptionstructure:thelessafamily’sincome,thelessthefamily’sincomeThegreatertheproportionofincome(ortotalexpenditure)spentonfoodpurchases,ashouseholdincomeincreases,theproportionofhouseholdincome(ortotalexpenditure)spentonfoodpurchaseswilldecrease.Byextension,thepooreracountry,thelargertheproportionofeachcitizen'saverageincome(oraverageexpenditure)spentonfoodpurchases.Asthecountrybecomesricher,thisproportiontendstodecrease.ThisisEngel'slaw.TheproportionoftotalfoodexpenditureintotalpersonalconsumptionexpenditureisalsoexpressedasEngel'scoefficient.

Application

Internationally,theEngelcoefficientisoftenusedtomeasurethelivingstandardsofpeopleinacountryandregion.AccordingtothestandardsproposedbytheFoodandAgricultureOrganizationoftheUnitedNations,anEngelcoefficientabove59%meanspoverty,50-59%meansfoodandclothing,40-50%meanswell-off,30-40%meansrich,andlessthan30%meanstherichest.Whenourcountryusesthisstandardtocompareinternationalandurban-ruralcomparisons,wemusttakeintoaccountthoseincomparablefactors,suchasthedifferenceinthepriceofconsumergoods,thedifferenceinresidents'livinghabits,andthespecialfactorscausedbythedifferenceinsocialandeconomicsystems.Fortheseincomparableproblemsincross-sectionalcomparisons,correspondingeliminationsshouldbemadeduringanalysisandcomparison.Inaddition,whenobservingchangesinhistoricalconditions,itshouldbenotedthattheEngelcoefficientreflectsalong-termtrend,ratherthananabsolutetrendofdecliningyearbyyear.Itseeksthelong-termtrendbysmoothingoutshort-termfluctuations.

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