Average propensity to consume (APC) is the percentage of income spent. To find the percentage of income spent, one needs to divide consumption by income, or .
Sometimes, disposable income is used as the denominator instead, so ,
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- where C is the amount spent, Y is pre-tax income, and T is taxes.
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The inverse is the average propensity to save (APS).
Average propensity to consume (APC) is the percentage of income people desire to spend.
It is key to note that Average Propensity to Consume (APC) is very different from Marginal propensity to consume (MPC). These two values are often confused.
Famous quotes containing the words average, propensity and/or consume:
“But the whim we have of happiness is somewhat thus. By certain valuations, and averages, of our own striking, we come upon some sort of average terrestrial lot; this we fancy belongs to us by nature, and of indefeasible rights. It is simple payment of our wages, of our deserts; requires neither thanks nor complaint.... Foolish soul! What act of legislature was there that thou shouldst be happy? A little while ago thou hadst no right to be at all.”
—Thomas Carlyle (1795–1881)
“The propensity to truck, barter and exchange one thing for another ... is common to all men, and to be found in no other race of animals.”
—Adam Smith (1723–1790)
“We have no more right to consume happiness without producing it than to consume wealth without producing it.”
—George Bernard Shaw (1856–1950)