Applications
In microeconomics Engel curves are used for equivalence scale calculations and related welfare comparisons, and determine properties of demand systems such as aggregability and rank.
Engel curves have also been used to study how the changing industrial composition of growing economies are linked to the changes in the composition of household demand
In trade theory, one explanation inter-industry trade has been the hypothesis that countries with similar income levels possess similar preferences for goods and services (the Lindner hypothesis), which suggests that understanding how the composition of household demand changes with income may play an important role in determining global trade patterns.
Engel curves are also of great relevance in the measurement of inflation and tax policy.
Read more about this topic: Engel Curve