Autonomous consumption

Autonomous consumption (also exogenous consumption) is the consumption expenditure that occurs when income levels are zero. Such consumption is considered autonomous of income only when expenditure on these consumables does not vary with changes in income; generally, it may be required to fund necessities and debt obligations. If income levels are actually zero, this consumption counts as dissaving, because it is financed by borrowing or using up savings. Autonomous consumption contrasts with induced consumption, in that it does not systematically fluctuate with income, whereas induced consumption does.^[1] The two are related, for all households, through the consumption function:

C=c_{0}+c_{1}Y_{d}

where

C = total consumption,
c₀ = autonomous consumption (c₀ > 0),
c₁ = the marginal propensity to consume (the gradient of induced consumption) (0 < c₁ < 1), and
Y_d = disposable income (income after government taxes, benefits, and transfer payments).

References

^ Colander, David C. (2004). Macroeconomics (Fifth ed.). Boston, MA: McGraw-Hill/Irwin. pp. G–1 & G–4 (Glossary). ISBN 0-07-255119-4.

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[1] Colander, David C. (2004). Macroeconomics (Fifth ed.). Boston, MA: McGraw-Hill/Irwin. pp. G–1 & G–4 (Glossary). ISBN 0-07-255119-4.

[1]

v t e Consumer behaviour
Concepts	Consumption Autonomous consumption Induced consumption Consumer culture theory Consumer debt Consumer economy Consumer spending
Research types	Consumer choice Consumer economics Consumer neuroscience Consumer product Marketing research
Consumer attributes	Consumer confidence Consumer confusion Consumer ethnocentrism Consumer socialization Consumer's risk Consumption function Cultural consumer Homo economicus
Processes	Consumers' co-operative Consumer-to-business Factory-to-consumer Consumer service Consumerization

Autonomous consumption

See also

References