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Induced consumption

Consumption that varies with income

Wikipedia contributorsAdapted for Fathomly · View authors
1 min read
Source updated June 20, 2026

Induced consumption is the portion of consumption that varies with disposable income. 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,

C=a+b\times Y_{d}

induced consumption is represented by the term b\times Y_{d}, where Y_{d} denotes disposable income and b is called the marginal propensity to consume.

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This article is adapted from the Wikipedia article “Induced consumption”, written by its contributors and licensed under CC BY-SA 4.0. Fathomly has changed the layout, removed citation markers, navigation and maintenance notices, and adjusted punctuation. This adapted version is shared under the same license. For references, see the original article.

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