Induced consumption

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Induced consumption is household consumption that varies with income. When a change in 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.

Some Ways in which Induced Consumption Occurs[edit]

  • Conspicuous consumption

When people consume things to display a higher status than others.

  • Artificial consumption

When people consume things because they were introduced to them through various forms of media.