What is the most important determinant of a household's consumption spending?

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pohnpei397 | College Teacher | (Level 3) Distinguished Educator

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While this is not a hard and fast rule, the most important determinant of a household's consumption spending (in absolute terms) is their income.  A household generally spends more as it makes more in income.

This is, of course, not always true.  There are a number of variables that can intervene and throw this relationship off.  For example, the number of people in a family and their ages will have a significant impact on the number of dollars that the family spends on consumption.  So will (in a less easily measured way) the family's values -- are they thrifty or not.

But the general rule is more income = more consumption.

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