Autonomous consumption

Autonomous consumption (also exogenous consumption) is 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 intervention (T) – benefits, taxes and transfer payments – equal to Y – T).

References

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

Consumer behaviour

Concepts	Consumption (economics) Consumer spending Autonomous consumption Induced consumption Consumer debt Consumer economy Consumer culture theory

Research types	Consumer behaviour Marketing research Consumer neuroscience Consumer choice Consumer product Consumer economics

Consumer attributes	Consumer confusion Consumer's risk Consumer confidence Consumer socialization Consumer ethnocentrism Cultural consumer Homo economicus Consumption function

Processes	Consumer cooperative Consumer-to-business Factory-to-consumer Consumer service Consumerization

Autonomous consumption

References

See also