Analysis of Food Consumption Among Urban Households of Sulawesi: Validation of Engel^s Law Siti Nurhaliza (a*), Syamsuddin (a), Mohamad Ichwan (a), Edhi Taqwa (a), Yunus Sading (a)
a) Master of Economics, Postgraduate Tadulako University
Jalan Soekarno Hatta Km. 9, Palu 94118, Indonesia
*sitinurhaliza0103[at]gmail.com
Abstract
This study aims to examine the validity of Engel^s Law among urban households in Sulawesi and uses cross-sectional microdata from the 2023 National Socio-Economic Survey (SUSENAS), comprising 13,933 urban households across six provinces in Sulawesi. The results show that the food expenditure share decreases systematically as household income rises. This decrease varies from 17.43 to 29.88 percentage points across provinces, with Gorontalo experiencing the largest decrease. Despite that, absolute food expenditure increases by 5 to 8 times between the lowest and the highest income groups, emphasizing that food remains a necessity good. The estimated income elasticity with respect to the food expenditure share shows mainly negative values ranging from (-0.008) to (-0.504)- this shows a threshold effect in middle- to upper-income groups, where expenditure shifts from basic needs to non-food consumption. These findings highlight the relevance of Engel^s Law in developing countries and emphasize the importance of policies to protect susceptible households to strengthen food security and alleviate poverty in urban Sulawesi.
Keywords: Engel^s law, food expenditure, income elasticity, urban household consumption
