The UN's FAO ranks food as the third most fundamental human need, following air and water. Despite this universal requirement, financial constraints vary sharply. The key takeaway: the poorest households must spend a larger percentage of their earnings on food compared to the rich. Why is this the case?

The link between income and food spending, formalized in the 19th century by German statistician Ernst Engel, is known as Engel's Law. It states that, on average, the proportion of a household's total budget spent on food is higher for poor families than for rich ones, even if the absolute monetary value spent by the wealthy is greater.

To grasp this concept, one must understand the notion of inelastic demand for staple foods like cereals, roots, and tubers. These items are vital necessities, meaning purchases must continue regardless of income fluctuation. An individual must constantly secure a minimal caloric intake from these foods simply to survive.

This inelastic demand explains why staple commodities defy typical consumption logic and remain essential expenditures, especially for the least affluent households. Staples offer the cheapest source of calories compared to items like fruits, vegetables, and dairy products. Even during periods of high inflation, spending on basic staples is non-negotiable, unlike luxury goods such as chocolate or cashews, where consumption can easily be reduced.

Empirical data starkly illustrates this principle: the FAO reports that in 2022, Nigeria’s GDP per capita was $4,963, and food accounted for 59% of consumer total expenditure. Meanwhile, in the Netherlands, consumers spent only 11.8% of their total budget on food, with the country’s GDP per capita being $59,250.

Key Indicator for Public Policy

From a global perspective, Engel’s Law is crucial for understanding economic and nutritional dynamics, particularly within impoverished households. It is important to note that the money the poorest families allocate to food is often already less than the minimum required for a diversified and nutritious diet that includes meat, dairy, fruits, and vegetables.

In Africa, where staple foods sometimes account for over 70% of total available calories (notably in Mali, according to the FAO), a sharp price variation in this category has widespread implications for household living standards, nutritional status, and overall well-being. Consequently, higher taxation on essential food items disproportionately places the fiscal burden on low-income families.

This context suggests public policies must not only ensure the economic accessibility of basic food items to ease the financial burden but also focus attention on other products, such as fruits, vegetables, and processed foods, which positively impact both food security and nutrition.

Factors That Vary the Principle

While Engel's Law clearly illuminates the relationship between income and diet, it does not apply uniformly. The very definition of poverty varies significantly by context. A household classified as poor in North America does not face the same constraints as one in sub-Saharan Africa, meaning food budget proportions can differ substantially.

Furthermore, there are scenarios where Engel's Law may not hold true. When income is extremely low, some households might reduce the absolute monetary value of their food spending. This could involve skipping meals to cover other costs (transportation, housing, education, and health), relying on food donations from relatives, or limiting quantities purchased. These coping strategies can distort the law’s logic, meaning the percentage of income spent on food does not necessarily rise; instead, it may decrease due to a sheer lack of means.

Beyond this, there are also sharp differences between rural and urban households. In rural areas of sub-Saharan Africa, for instance, a significant portion of food consumption comes from self-production (cereals, tubers, vegetables), reducing dependence on monetary income. In these cases, the measured share of the budget dedicated to food may appear lower, not because the household is spending less, but because a portion of consumption bypasses the market entirely.

In urban areas, however, where households purchase nearly all their goods, the law is often clearer: a drop in income mechanically forces the food budget share to rise. These varying nuances demonstrate that Engel's Law is a general trend rather than an absolute rule. Any interpretation requires careful consideration of the social, geographical, and economic realities of the observed households.

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