Income elasticity of food expenditure among urban households in Sulawesi: Evidence from engel’s law

Siti Nurhaliza, Mohamad Ichwan (), Rita Yunus, Edhi Taqwa () and Yunus Sading ()
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Siti Nurhaliza: Tadulako University
Mohamad Ichwan: Tadulako University
Rita Yunus: Tadulako University
Edhi Taqwa: Tadulako University
Yunus Sading: Tadulako University

Priviet Social Sciences Journal, 2026, vol. 6, issue 2, 512-526

Abstract: This study examines the responsiveness of food expenditure shares to income changes among urban households in Sulawesi using income elasticity analysis. Employing cross-sectional microdata from the 2023 National Socio-Economic Survey (SUSENAS), comprising 13,933 urban households across six Sulawesi provinces, we calculate arc elasticity for nine income group transitions. The results reveal predominantly negative elasticity values ranging from -0.008 to -0.504, confirming patterns consistent with Engel’s Law. The elasticity pattern exhibits an inverted-curve shape: weak in low-income groups (-0.0103 to -0.091), strengthening in middle-income groups (-0.2 to -0.5), and moderating in the highest transition (-0.059 to -0.268). This reflects critical threshold effects, where middle-income households demonstrate the strongest responsiveness in reallocating expenditures from food to non-food categories. Substantial interprovincial variations emerged, with Gorontalo exhibiting the strongest elasticity (-0.504), while Central Sulawesi showed unique patterns, including positive elasticity at specific transitions. Elasticity values consistently below one confirm food as a necessary good across all provinces. These findings provide crucial policy insights: low-income households require targeted protection through subsidies and social assistance, whereas middle-income households would benefit most from income growth policies. Provincial heterogeneity underscores the need for context-specific rather than uniform regional interventions.

Keywords: Engel’s Law; food expenditure share; income elasticity; urban household consumption (search for similar items in EconPapers)
Date: 2026
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DOI: 10.55942/pssj.v6i2.1424

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