Definition
The wealth elasticity of consumption quantity for some good will determine the size of the expenditure shift due to ''unexpected'' changes in net personal wealth, ''Macroeconomic implications
Most researchers calculate the wealth effect in real terms, so aWhy income and wealth elasticities are separable
A naïve assumption (or first approximation) linking the wealth and income elasticities of demand is: * Income elasticity = Wealth elasticity × rate of investment return. However, this approach overlooks the fact that people typically treat income andOther differences from the income effect
If 'leisure time' is a superior good the income effect will partially cancel itself out, since people will work less as their hourly pay goes up. A change in net wealth doesn't require economic labour to produce, and has a different impact on the labour market.See also
* Engel curve *External links