Income Elasticity for Food

This graph is taken from the website, www.pooreconomics.com   The graph shows the percentage of budget appropriated to food for those individuals that earn less than a $1 a day.  The point is: food is income inelastic.  That means that when income increases the quantity demanded  of food increases by less.  The elasticity that I remember in the book was .68.

The authors point out that hunger might not be the reason why the poor are stuck in poverty.  When given more income, the poor do not consume more food, but food with higher calories.  These foods with higher calories might not be high in micro-nutrients shown to improve productivity and health.

This book is superb and a fun read for those interested in economics.