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

Siti  Nurhaliza; Mohamad  Ichwan; Rita  Yunus; Edhi  Taqwa; Yunus  Sading

doi:10.55942/pssj.v6i2.1424

Authors

Siti Nurhaliza Tadulako University https://orcid.org/0009-0009-1189-1025
Mohamad Ichwan Tadulako University
Rita Yunus Tadulako University
Edhi Taqwa Tadulako University
Yunus Sading Tadulako University

DOI:

https://doi.org/10.55942/pssj.v6i2.1424

Keywords:

Engel’s Law, food expenditure share, income elasticity, urban household consumption

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.

Author Biographies

Siti Nurhaliza, Tadulako University

Siti Nurhaliza, S.E. is a graduate student in the Master of Economics program at the Faculty of Economics and Business, Universitas Tadulako, Palu, Indonesia. Her research interests focus on household consumption economics, development economics, and welfare analysis in Eastern Indonesia. This study is part of her master’s thesis examining consumption patterns and food security in the Sulawesi region.

Mohamad Ichwan, Tadulako University

Dr. Mohamad Ichwan is a lecturer in the Master of Economics program, Faculty of Economics and Business, Universitas Tadulako, Palu, Indonesia. He specializes in development economics, public economics, and regional and industrial economics. His research examines household consumption behavior, food economics, and welfare analysis, particularly regarding food expenditure patterns. His work emphasizes household economic decision-making and food security in developing regions.

Rita Yunus, Tadulako University

Dr. Rita Yunus, S.E., M.Si. is a lecturer in the Faculty of Economics and Business at Tadulako University, Palu, Indonesia. Her research focuses on development economics, household consumption and expenditure patterns, public economics, regional economic development, and poverty and vulnerable poor households in Central Sulawesi. She has published on topics such as expenditure patterns of the poor in Central Sulawesi, vulnerable poor households on Sulawesi Island, and monetary economics.

Edhi Taqwa, Tadulako University

Dr. Edhi Taqwa, S.E., M.Si. is a lecturer in the Master of Economics program, Faculty of Economics and Business, Universitas Tadulako, Palu, Indonesia. He specializes in development economics, public economics, and regional and industrial economics. With strong expertise in quantitative analysis and applied econometrics, his research contributes to understanding regional development dynamics and economic welfare in Eastern Indonesia, particularly in Central Sulawesi.

Yunus Sading, Tadulako University

Dr. Yunus Sading, S.E., M.Si. is a lecturer in the Master of Economics program, Faculty of Economics and Business, Universitas Tadulako, Palu, Indonesia. He specializes in development economics, public economics, and regional and industrial economics. His research focuses on household consumption patterns, food security, and poverty analysis in Central Sulawesi.

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