Friday, November 13, 2009

Where do/would people spend their money?

Has anyone ever studies how people spend money? What I have in mind is an analysis of what people would do with the next marginal increase in their income. Presumably with a minimum income, enough for only food, shelter, etc. most people would concentrate their spending in those areas. What if they had a bit more. What would they do with it? Of course different people would do different things with it. Some would save—at least part of it. Some would buy (more) entertainment or eat out more. Some would buy (more or more expensive) clothes. Some would buy toys. Etc. I suspect, though, that one could come up, with an aggregate forecast of the increased demand to be generated in various sectors (including savings instruments) of an increase in income levels. Why hasn't anyone done a study of that sort—or has someone?

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