Income elasticity has always interested me because of its true to life applications. It’s very remarkable how one can actually see how their demand curves shift to the left and right as our income fluctuates. When I lived at home and my parents subsidized a great deal of my expenses, normal goods made up a good deal of my consumption. This is because the quantity demanded for normal goods increases as income increases. After high school, I left to Mexico on a 2-year mission for the LDS Church. We received 200 pesos a week (roughly $20) for food and living expenses. That’s when inferior goods such as rice, beans, and tortillas became a normal part of my diet. When I returned home, my parents helped me get on my feet and I had somewhat of a cross between normal and inferior goods at my disposal. Now, I am a married college student with a baby girl and inferior goods seem to have raided my house and built a permanent establishment in most locations.
The article I found says that “[in] many cases, income elasticity has a direct impact on the dietary habits of households.” That hit home for me because as I look back on the past, it’s the part of my life that has been affected most. Two of the inferior goods it presents as inferior goods are on my table with me as I’m writing this (Ramen and store brand food). Knowing the effects of income elasticity can help people and companies forecast demand of goods depending on current economic conditions and other factors. Right now, for example, in our own economic state, I think it would be a good guess in saying that the quantity demanded of inferior goods has gone up and inversely for normal goods.