consumption function

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consumption function

in economics, the relationship between consumer spending and the various factors determining it. At the household or family level, these factors may include income, wealth, expectations about the level and riskiness of future income or wealth, interest rates, age, education, and family size. The consumption function is also influenced by the consumer's preferences (e.g., patience, or the willingness to delay gratification), by the consumer's attitude toward risk, and by whether the consumer wishes to leave a bequest (see legacy). The characteristics of consumption functions are important for many questions in both macroeconomics and microeconomics.

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Encyclopedia Britannica, 2008. Encyclopedia Britannica Online.
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