Course work: Modern analysis of the structure of consumption, savings and their determining factors. Consumer expenditures Volume of consumer expenditures, personal consumer expenditures, consumer expenditures of the population, structure of consumer expenditures,
According to the classical concept, the level of total expenditure, determined by total income, is always sufficient to purchase products produced under full employment conditions. The Keynesian approach, questioning this statement, proceeds from the fact that the volume of demand of individual economic entities is formed under the influence of various incentives, including psychological factors. Since the time of Keynes, the concepts of “inclination”, “expectations”, “preference”, etc. have been included in the tools of economic science. These concepts, already in the form of specific economic indicators, make it possible not only to take into account psychological factors, but also to measure their influence when analyzing macroeconomic equilibrium.
The consumption structure of both an individual and a family is quite individual. People spend money according to their income and lifestyle. However, there are some common priorities. Thus, it is not difficult to imagine the expenses of any family in order of their importance, on food, clothing, housing, transport, medicine, education. At the same time, the expenses of low-income families fall mainly on food and basic daily needs. As family incomes increase, expenses for clothing, durable goods, recreation, entertainment, savings, etc. increase.
Figure 4. Factors influencing consumption and savings
So, consumption is the main component of total expenditure. Therefore, it is important to understand the main determinants of consumption expenditure. There are many factors that influence the level of consumer spending. Let's consider the possibility of influence of these factors:
1. Level of current income. Total consumption generally depends on total income. The role of the psychological factor influencing consumption is described by J.M. Keynes as follows: people tend, as a rule, to increase their consumption as income grows, but not to the same extent as income grows.” (J.M. Keynes, “The General Theory of Employment, Interest and Money”). The relationship between consumption and the change in income it causes is called the marginal propensity to consume.
2. Sales efforts (advertising). The fact that an increase in the total aggregate demand for any one good or group of goods may arise simply from a decrease in the demand for other goods is sometimes overlooked by those who extol the virtues of advertising and other sales efforts as means of increasing aggregate demand. However, it is quite possible that increases or decreases in sales effort could affect total consumer spending at a given income level.
3. Level of well-being (wealth). The amount of wealth has an important influence on consumption. Based on the hypothesis of diminishing marginal utility, it is obvious that the greater the initial amount of wealth, the lower its marginal utility. Therefore, as wealth increases, the tendency to reduce consumption in order to increase future wealth decreases. All other things being equal, the more savings a person has, the less his desire to accumulate more (the higher the level of well-being, the higher consumer spending).
4. Expectations. Expectations regarding movements in price levels and production volumes can also have a certain impact on the formation of consumption. Thus, expectations of price increases can stimulate current consumption, and vice versa.
5. Taxes. Taxes are paid partly from consumption and partly from savings. And the share of income received from tax cuts will be partially consumed.
6. Transfers. An increase in transfers means an increase in personal disposable income, and therefore an increase in consumer spending.
7. Consumer debt (level of household debt). It can be expected that the level of consumer debt will make households want to direct their current income either to consumption or to savings. If household debt has reached such a level that, say, 20% or 25% of their current income is set aside to pay the next installment on previous purchases, then consumers will be forced to reduce current consumption in order to reduce debt.
8. Interest rate on consumer loans. The effect of interest rates on consumption cannot be determined unambiguously either theoretically or empirically. An increase in the interest rate increases the present cost of consumption relative to the future (substitution effect). But if a household is a net creditor, an increase in the interest rate also increases its lifetime income, which will lead to an increase in consumption.
9. Price level. Changes in the price level change the real value, or purchasing power, of some types of wealth. More precisely, the real value of financial assets whose nominal value is expressed in money will be inversely proportional to changes in the price level. This effect is called the wealth effect.
10. Number of consumers and structural factors. These include: average family size, average age of family heads, geographical features, composition of national groups of society, racial characteristics, level of urbanization, etc.
Savings are income not spent on the purchase of goods and services as part of current consumption. They are carried out by both households and firms. The amount of savings is inversely proportional to the amount of consumption. Savings come from increased production (and income) or reduced consumption. The process of saving is called the term “savings”, and their amount on a national scale is called “gross savings”.
Since personal savings can be defined as “that which is not spent” or as “that part of income after taxes that is not consumed”; in other words, after-tax income equals consumption plus savings, then when considering the factors determining consumption (discussed in the previous question), we simultaneously considered the factors determining savings, it remains to determine their impact:
1. Level of current income. In the short term, as current disposable income increases, APC decreases and APS increases, that is, as family income increases, the share of consumption expenditures decreases relatively and the share of savings increases relatively. However, in the long term, the average propensity to consume stabilizes, since the amount of consumer spending (and therefore the amount of savings) is influenced not only by the size of the family’s current disposable income, but also by the size of the total living income, as well as the amount of expected and permanent income
3. Level of well-being (wealth). Generally speaking, the greater the accumulated wealth, the greater the amount of consumption and the less the amount of savings at any level of current income.
4. Expectations. Expectations of rising (falling) prices and scarcity of goods (the perception that goods will be in abundance) lead to a decrease (increase) in savings.
5. Taxes. Taxes are paid partly by consumption and partly by savings, so an increase in taxes will move the saving schedule downwards and, conversely, the share of income received from tax cuts will partly go to household savings.
6. Transfers.
7. Consumer debt. If consumer debt is relatively low, household savings levels may rise unusually, causing their debt to increase.
8. Interest rate on consumer loans. In general, income effects for net debtors and net creditors are usually assumed to cancel each other out at the aggregate level, so that the substitution effect (which affects all households in the same direction) dominates. Based on these considerations, it can be assumed that an increase in the interest rate usually reduces current consumption and increases aggregate saving, despite the fact that the savings of some creditor households may decrease.
9. Price level.
10. Number of consumers and structural factors.
It is traditionally believed that an increase in savings has a beneficial effect on the economic situation of both individual citizens and the country as a whole. Keynes drew attention to the fact that, under certain conditions, an increase in savings can lead to undesirable consequences for the economy.
If the economy is in a state of underemployment, an increase in the propensity to save naturally means nothing more than a decrease in the propensity to consume. Reduced consumer demand means it is impossible for goods producers to sell their products. Overstocked warehouses cannot in any way facilitate new investment. Production will begin to decline, mass layoffs will follow, and, consequently, a fall in national income (the total income earned by the owners of economic resources) in general and the income of various social groups. This is the inevitable result of saving more. The virtue of saving turns into its opposite - the nation becomes poorer, not richer.
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Content
Introduction………………………………………………………………………………2
1. Consumer expenses and their determining factors…………….3
2. Savings: essence, types and main factors. Relationship
Savings and consumption and their impact on the volume of national
Income…………………………………………………………………………………8
3. Features of savings and consumption in the Russian economy.....18
Workshop……………………………………………………….………….21
Conclusion…………………………………………..…………………….24
Literature……………………………………………………………...……………..26
Introduction
The main tenet of Keynesian economic theory, which revolutionized economic science in the mid-1930s. and gave impetus to the development of macroeconomics, is the concept of macroeconomic equilibrium. The main issue of macroeconomic analysis was considered by J. Keynes to be the mutual relationship between planned expenditures and the national product. Will the spending plans of consumers, producers, and governments, set in isolation, create sufficient demand for all the goods and services that the economic system can produce at full employment? 1
Classical as well as neoclassical theory, on the one hand, and Keynesian, on the other, answer this question differently.
Fluctuations in consumption are the most important causes of cyclical fluctuations in the economy, therefore the analysis of theories of consumer demand greatly helps to study the patterns of macroeconomics. It makes it possible to find out how consumption affects national income, how savings and investments interact with each other, and what is their connection with national income. 1
The theory of consumer behavior developed by J.M. Keynes occupies a leading position in macroeconomic theory as the most important tool of economic analysis.
The purpose of this work is to study the components of aggregate demand - consumption and savings, and also to consider their impact on national income.
To achieve the set goal in the work, it is necessary to solve the following tasks: 1) identify the essence of consumer spending and the factors that determine them; 2) analyze the essence of savings, consider the impact of consumption and savings on the volume of national income; 3) analyze the features of savings and consumption in the Russian economy.
^ Consumer expenses and their determining factors
The cost structure of different population groups is different. The share of food costs is greater among those with the lowest incomes (from 50 to 100%), and lowest among the rich (20%).
In real life, there are neither individuals nor families who spend their money in the same way, so economic theory uses the so-called qualitative model of behavior - this is an average model of expenses of people with different income levels, built on the basis of studies of family budgets. These models are called Engel's laws, named after the German statistician Ernst Engel (1821-1896).
The essence of consumption as a stage of the reproduction process lies in the individual and joint use of consumer goods by the population in order to satisfy the material and spiritual needs of people.
When considering consumption as an element of aggregate demand, we are talking about household expenditures on the purchase of goods and services. More details about the shifting factors in the formation of consumer spending in the current period are interpreted as a problem of intertemporal choice of consumers. Households make a choice between consuming today and increasing consumption in the future. But the possibility of increasing consumption in the future depends on savings in the present period. It follows that savings are deferred consumption. At the same time, savings made in the present period are nothing more than a deduction from current consumption, since savings are the part of disposable income not used for consumption. In other words, the identity is true: where Y is the disposable income of households (national income minus net taxes). Due to the dual role of savings (as a source of additional future consumption and a deduction from current consumption), the problem of consumer choice at the macro level appears as a problem of distributing disposable income between consumption and savings. 2
In macroeconomic terms, the question of which factors have a decisive influence on consumer choice is of particular importance, i.e. determine the functions of consumption and savings. Classical economists believed that no reasonable person intending to save would keep it in the form of money if he could use the savings in such a way that they would earn him interest (through bank deposits, buying stocks or bonds). The higher the real interest rate, the more incentive people have to save, and, conversely, when this rate decreases, people's interest in saving decreases. From this they concluded that saving is an increasing function of the real interest rate. Since consumption and savings add up to disposable income, consumption will decrease when the real interest rate rises and increase when it falls. In other words, consumption from the classical point of view is a decreasing function of the real interest rate.
J. M. Keynes opposed this provision of the classical doctrine. He argued that in households' consumption choices, the real interest rate does not play a determining role, since people's current consumption is always preferable to consumption in the distant future. Intertemporal preference for current consumption neutralizes the effect of interest rates on consumer choice.
Keynes hypothesized that the main factor determining the level of consumption is the current income of households. “The basic psychological law, the existence of which we can be quite confident not only from a priori considerations, based on our knowledge of human nature, but also on the basis of a detailed study of past experience,” he wrote, “is that people tend, as a rule, , increase your consumption as your income grows, but not to the same extent as your income grows." 3
On this basis, he considered consumption as an increasing function of current household income: C = Y
In addition to income, consumption volume is influenced by many other factors, both objective and subjective. The main objective factors of consumption include the price level, consumer property, the real interest rate, the level of consumer debt, and the level of consumer taxation. Subjective factors include the marginal propensity to consume and consumer expectations regarding future changes in price levels, cash income, taxes, availability of goods, etc. When constructing the Keynesian consumption function, the values of all these factors are assumed to be stable. And their changes are interpreted as shifts in the consumption function.
Among all these factors, the most important is the marginal propensity to consume, which is a parameter that establishes a quantitative relationship between consumption and disposable income.
The marginal propensity to consume (C) shows what portion of each unit of additional disposable income households allocate to increase consumption. It is measured quantitatively as the ratio between the change in consumption and the change in disposable income that caused it:
Since each additional unit of disposable income is distributed by households between consumption and savings, the quantitative value of the marginal propensity to consume is in the range from 0 to I: 0
If C-O, then the entire increase in income is directed to savings. If C = 1, then the entire increase in income is consumed.
Similarly to the marginal propensity to consume, the marginal propensity to save can be determined. The marginal propensity to save is the portion of each additional unit of disposable income that goes towards increasing savings. Quantitatively, it is calculated as the ratio of the change in savings to the change in disposable income that determined it:
It is easy to see that from equality (2) it follows that the sum of the marginal propensity to consume and the marginal propensity to save is equal to one: C + S = 1.
The consumption function corresponding to the “basic psychological law” discovered by Keynes can be written mathematically as:
Where C0 is the amount of autonomous (i.e., independent of current disposable income) consumption. It is determined by consumption factors that are not directly reflected by the consumption function. If current income is 0, then consumption is carried out by reducing accumulated property (selling 1 stocks, bonds, durable goods, jewelry, real estate, etc.)
Consumer spending (C) depends primarily on the level of disposable personal income. The relationship between the amount of income (Y) and the level of consumption (C) is called the consumption function. The consumption function shows the direct relationship between consumption and income. Figure 1 shows a graph of the consumption function. The consumption curve (straight line) does not come from the origin. This happens because people, having stopped receiving income, do not immediately stop buying goods and services (they use accumulated savings or borrow money, etc.).
Consequently, there is a certain level of consumption that does not depend on the level of income - autonomous consumption.
Thus, the consumption function - C - consists of two components: autonomous consumption - C 0 - and induced (that is, depending on the level of income Y) consumption - MPC * Y:
C = C 0 + MPC * Y,
Where MPC - marginal propensity to consume - represents the share of income growth (Y) by the amount by which consumption increases (C): MPC =
C C = C 0 + MPC * Y
MRS
C 0
0Y
^
Figure 1 shows the consumption graph (C), the slope of the curve C characterizes the marginal propensity to consume.
Average propensity to consume - APC - represents the share of consumption in income:
ARS= 
.
As can be seen in Figure 1, as income (Y) increases, the marginal propensity to consume (MPC) remains unchanged, while the average propensity to consume (APC) decreases.
In the future, to simplify the analysis, we will consider all consumer expenditures (C) as induced, since the main characteristic of consumption is the marginal propensity to consume (MPC)
^ Savings: essence, types and main factors. The relationship between savings and consumption and their impact on national income
Modern economic theory provides several definitions of savings. · First, savings refers to the portion of income that an individual intends to consume in the future instead of consuming it in the present. Secondly, savings refers to that part of income that an economic entity intends to consume in the future instead of consuming it in the present. Three types of economic entities can be distinguished: the population, corporations and the state. Accordingly, three types of savings arise: savings of the population, savings of the corporate sector, and state savings.
Savings can also be defined as the portion of income remaining after taxes that is not consumed. That is, savings are considered in terms of the component of income for the current year that is not paid as taxes or spent on the purchase of consumer goods, but goes to bank accounts, invests in insurance, bonds, stocks and other financial assets.
Keynes' theory of absolute income, put forward by him in the thirties, states that there is a linear relationship between savings and income, expressed as follows:
S = a + sY, where S is savings, Y is the current amount of disposable income, a is a constant, s is the marginal propensity to save. According to this theory, the saving ratio (savings as a percentage of GNP) should increase in countries where income growth is observed.
Savings function. Marginal propensity to save. Households' decision about how much of their personal disposable income (Y) to spend on consumption means that the rest of their income is saved (we do not take interest payments into account, so Y = C + S). Figure 2 shows a graph of the savings function S (straight line with slope MPS).
Rice. 2
S MPS - marginal propensity to save is the share of the increase in income by which savings increase:
MPS = 
.
Since Y = C + S, so
MPC + MPS = 1, and the sum of the slopes of curves C and S is equal to 45 0.
Saving (S) plays a very important role in Keynesian analysis, but it must be remembered that saving is not part of the NNP and therefore is not part of aggregate demand.
All savings theories consider the level of income of the population as a determining factor. But income is not the only factor affecting savings. Other factors are the structure and level of interest rates, the age structure of the population, and the ratio of urban and rural populations. The nature of the dependence of the level of savings on these factors will become clearer if we analyze the motives for saving. Currently, there are four most common motives for savings of the population: 1) provision for old age; 2) precaution; 3) accumulation for the purpose of bequest; 4) deferred demand. Providing for old age is considered by many to be the main motive for savings. It is this that underlies the life cycle theory. The distribution of savings and consumption over time depends on various factors, among which the most important are the market interest rate, the degree of an individual’s risk appetite, the individual scale of utilities of income at different times, and the efficiency of the capital market. In addition, life expectancy and timing of retirement also influence saving decisions. Precautionary saving is associated with an individual's feeling of uncertainty regarding the amount of income received and the exact date of death. Since a person does not know exactly what period of time to count on, he creates a certain "stock" of savings, since having an "unused stock" at the time of death is more preferable to him than "overspending" savings before such a moment. As a result, as studies show, the level of savings is influenced not only by the expected temporary distribution of income, but also by their absolute size: the higher the individual’s income level, the greater the excess of savings above the “normal” level, which leads to increased accumulation of wealth by the time of retirement. pension and, as a consequence, to an increased level of consumption in old age. Research in the US, UK and other countries has shown that the life cycle model contradicts observable phenomena, namely the fact that the population continues to save after retirement. In part, this contradiction can be explained by another motive, namely the need to accumulate wealth for transmission to subsequent generations. It is believed that this motive can lead to an increase in the national saving rate only during periods of economic expansion (due to population growth, productivity growth, or both). In the case of a static economy, an increase in saving for the purpose of bequest will not lead to a nationwide increase in savings: the transfer of certain resources from one generation to the next will not lead to a change in the total quantity of these resources. A specific motive for personal savings is the accumulation of the amount necessary to make large expenses (buying a house, car, paying for education, etc.) - the so-called deferred demand. The accumulation of savings for these purposes is temporary and is associated with the need to synchronize the moments of income receipt and consumption. An alternative way to synchronize consumption with income generation is a consumer loan, in which expenses are first incurred and then appropriate deductions are made from income. The choice of method of financing large expenses (savings or consumer credit) depends on many factors, among which the main ones are the presence of a developed capital market and the uncertainty of future income. If we consider the factors of savings, the main factor determining the amount of savings in households is the level of income after taxes. 4
But, as in the analysis of demand, in the theory of savings there are factors not related to income: wealth; price level; expectations; consumer debt; taxation. The wealth factor is characterized by the fact that the greater the amount of savings in households, the lower the amount of savings at any level of income. Wealth refers to both real estate and financial assets owned by a household. Households save by abstaining from consumption to accumulate wealth. Moreover, the more wealth the population accumulates, the weaker its incentive to save. The amount of household wealth changes slightly from year to year and therefore does not cause serious fluctuations in the quantitative characteristics of savings. An increase or decrease in the level of prices for goods and services also ultimately affects the amount of savings. That is, changes in the price level change the real value (purchasing power) of certain types of values. This assumption can also be justified by the following conclusion: the real value of financial assets, the nominal value of which is expressed in money, will be inversely proportional to changes in the price level. This reflects the connection between saving theory and the wealth effect or the real cash balance effect. However, when analyzing the theory of savings, the assumption is made that the price level in the economy is unchanged (real, not nominal income after taxes is considered). The population's expectations related to the future situation in the markets for goods and services are also a significant factor, as they can affect current spending and savings. Expectations of higher prices and shortages of goods lead to lower savings because consumers naturally want to avoid paying higher prices. Conversely, the expected fall in prices and an increase in the supply of goods encourages consumers to increase savings. Fluctuations in the level of consumer debt cause households to strive to direct current income either to consumption or to savings. If household debt has reached a significant level, consumers will reduce their savings levels. Conversely, if consumer debt is relatively low, household savings may rise. Changes in taxation also lead to changes in the level of saving, since taxes are paid partly from consumption and partly from saving. Therefore, an increase in taxes will lead to a decrease in the level of savings. Conversely, the share of income received from a decrease in taxes will partly go to the savings of the population, thus causing an increase in the overall level of savings.
How consumption and savings are related to disposable income The Keynesian theory of production and full employment is quite complex and takes into account many factors and circumstances. Its comprehensive study is a task at a higher stage of economic preparation. There is, however, a simpler model, which, with some simplifications (constant prices, wages, interest rates, zero depreciation, zero indirect taxes on business, i.e. GNP = NNP = ND (To denote the volume of total production (income) we use the symbol Y.) etc.), still allows us to show the relationship between aggregate demand and income, analyze the functions of consumption, savings and investment, consider the effects of the multiplier and accelerator, etc.
Aggregate expenditures (A reservation should be made regarding the terminology used in presenting the Keynesian model. The term “aggregate expenditures” (AE - aggregate experiditures) will be used more often, which reflects the relationship between real output and income. In contrast, the term “aggregate demand” coming from the traditional AS-AD model, emphasizes the relationship between real output and the price level.) In the Keynesian model, the equilibrium of income and expenditure generally falls into four components (items): consumption, investment, government spending and net exports. However, the first two components are certainly the most important. So consumption accounts for up to 2/3 of the total amount of total expenses. Consumption, as noted in the previous chapter, is also one of the two main areas (the other is savings) of using national income. (At the level of an individual family - disposable income). An increase in the share of savings means an adequate decrease in the share of consumption, and vice versa.
In turn, these two quantities depend on the size of income (national or disposable - depending on the level of analysis).
The ratio of consumption to income reflects the current average propensity of the population to consume:
Where C is the amount of consumption, and Y is national or disposable income.
The ratio of the amount of savings made to the amount of income shows the average propensity to save:
Where S is the amount of savings.
So, unlike representatives of the classical school, J.M. Keynes considered savings as a function not of the interest rate (r), but of the amount of income: S = S(Y).
In the same way, consumption is a function of income: C = C(Y). According to Keynes's so-called "basic psychological law," "people tend, as a rule, to increase their consumption as their income increases, but not to the same extent as their income increases." This means that as income increases, the propensity to consume decreases and the propensity to save increases. To characterize this process, the marginal propensity to consume (MPC) and marginal propensity to save (MPS) are calculated:
Obviously, both MPC and MPS will each be less than one, and MPC + MPS = 1.
However, the question arises: what will consumption be at zero current income? Of course not zero. In the absence of current income (or even if it is available, but insufficient), consumers will live by “getting into debt” or selling off previously accumulated property (“negative saving”).
Consumption in this case is sometimes called autonomous to emphasize its independence from current income. The consumption function will look like this:
Formula. where c is autonomous consumption, MPC is the marginal propensity to consume, and Y is income.
The graphs of the consumption functions C and savings S have a positive slope, which reflects the direct dependence of these indicators on income. The slope of the curves C and S at each point is determined by the tangent of the angle of inclination of the tangent to this point. Moreover, in an economic sense, the tangent of the angle of inclination represents the marginal propensity to consume or save. In this case, the decreasing nature of the MPC determines the decreasing slope of the C curve, and the growing nature of the MPS determines the increasingly steep rise of the S curve. (With constant values of the MPC and MPS, the C and S graphs will have a linear appearance.) Considering that the values of consumption and savings are two part of the same income, it does not seem surprising that the savings curve is essentially a “mirror image” of the consumption curve. The 45-degree auxiliary line at the top represents a hypothetical situation where consumption exactly matches disposable (or national) income at any value (i.e., no debt, no savings, also called the “zero saving line”). It was introduced into the analysis by A. Hansen and P. Samuelson. The intersection of the consumption function curve with this line is called the “Keynesian cross”.
When income is less than Y e (to the left of the intersection point E), consumption exceeds disposable income. In the bottom graph, this corresponds to a “negative savings” situation. (Families with an income less than Yc live, which is called “in debt”) The intersection point E determines the only (other things remaining constant) value of the consumption function when consumption equals income and saving equals zero.
With income greater than Y e (to the right of point E), consumption becomes less than current income. Families (and the population as a whole) have the opportunity to save part of their income (bottom graph).
By summing up the consumption and savings schedules of all families, it is theoretically possible to obtain schedules of national consumption and national savings. (Although in practice they are much simpler to build). The national consumption schedule shows the size of aggregate consumer demand at each possible level of national income (production). The same can be said about the national savings schedule.
A change in consumption or savings depending on income means movement along the C or S curve. However, in addition to income, there are other factors that influence them. Changing them will lead to a shift up or down of the C or S curves
The following factors are usually identified:
Wealth level. At the family level, it is determined by all accumulated assets, including cash savings, securities, real estate, durable goods, etc., minus debts. It is believed that the richer families become, the more they consume and the less they save at each possible level of current income. Accordingly, curve C goes up (C 1), and curve S goes down (S 1).
Expectations. When deciding on the level of current consumer spending and savings, families take into account their expectations regarding rising prices for goods and services, future incomes, and commodity saturation of the market. If, for example, they foresee the emergence (or intensification) of a commodity deficit in the near future, then in the current period they will obviously reduce savings (line S - down) and increase consumption (line C - up).
Price level. An increase in the price level reduces the real consumer capabilities of the population and depreciates a certain part of the accumulated wealth (primarily financial). And vice versa. The described phenomenon is called the “wealth effect” or otherwise the “cash balance effect.”
Loan debt. If consumer credit debt increased in the previous period, then it would be logical to expect a decrease in current consumer spending, and vice versa.
Taxation. An increase in the number and rates of taxes leads to a reduction in both consumption and savings. In the event of a change (introduction) of autonomous taxes (i.e., independent of the level of current income), the shift of lines C and S relative to their previous positions will be parallel. When income tax rates change, the shift will not be parallel, because the slope of the C and S curves will change.
In the presence of a sufficiently large number of factors that can influence the level of consumption and savings, economists from different schools state the relative stability of schedules C and S. This is explained by the fact that factors not related to income often act in different directions, balancing each other
^ 3. Features of savings and consumption in the Russian economy
The most important component of the systemic crisis of the Russian economy during the period of market transformations was a deep investment crisis. Its main manifestations are: a significant decline in investment volumes, a reduction in total investment potential, negative shifts in the functional, sectoral and regional structure of investments, a decrease in the efficiency of investment use, and the speculative nature of emerging financial markets. The volume of investment decline is unprecedented: in 1999, the volume of investment was only 22% of the 1990 level 6
The investment crisis was caused by a whole complex of reasons, one of the most important among them was the decrease in gross national savings.
Savings represent that part of a country's disposable national income that is not spent on paying for the final consumption of society (the population, state budgetary institutions and non-profit organizations serving households). Disposable income is formed as a result of the primary distribution of national income to pay for hired labor and profit and the subsequent redistribution of primary income through the state budget and other parts of the financial system. 5
In the balance of cash income and expenses of the population, savings are represented by indicators of its expenditure part - the use of cash income received for deposits in savings and commercial banks, the purchase of shares and other securities, the purchase of foreign currency and an increase in ruble cash from individuals. Formation is determined by: the general level of income as a function of production; the amount of consumption expenditure as a function of consumption and the amount of expenditure on capital investment as a function of investment.
Investment is the most dynamic component of GDP and aggregate demand. During or immediately before a recession, investment's share of GDP and its growth rate typically fall. The revival and recovery in the economy are accompanied by growth (often outstripping) of investments, primarily in fixed capital. Changes in the other, largest component of GDP - final consumption - occur much more slowly. Unlike investment spending, it largely stabilizes GDP fluctuations.
At the same time, from the point of view of long-term dynamics of investment expenditures, the share of final consumption in GDP is important, forming demand restrictions on growth and, accordingly, the economy’s need for investment. In the Russian economy, it (as well as the share of gross fixed capital formation) has been lower in recent years than in developed countries and countries characterized by high growth rates, while in terms of the share of net exports in GDP, Russia has been in the first rank.
Economists and politicians usually explain the noticeable improvement in economic indicators in recent years by the devaluation of the ruble and high oil prices. This is true in principle: the impetus was really given by circumstances that can be called exceptional - the rapid depreciation of the ruble at the end of 1998-beginning of 1999 (by three to four times in a matter of months) and an almost threefold increase in world oil prices during 1999-2000 . At the same time, it cannot be denied that in recent years there have been positive changes in the Russian economic system itself.
Thus, the growth of investments in the export and raw materials sector, associated with a sharp increase in income as a result of the rise in world prices for raw materials, gradually went beyond its scope and covered a number of industries operating primarily on the domestic market. The expansion of domestic demand, supported both by rising household incomes and investment activity in the real sector, is beginning to play an increasingly important role in economic dynamics. Moreover, the increase in personal consumption of the population has today become the main factor in increasing production. 6
A feature of the growth in satisfaction of consumer demand at the beginning of 2006 was the proportional dynamics of real cash income, real wages, growth in retail trade and paid services, which may indicate a weak use of savings for consumption purposes (unlike the beginning of 2005, when consumption growth was accompanied by a decrease in real disposable income of the population by 1.9%).
The total volume of cash income of the population in the first half of 2007 amounted to 9.1 trillion rubles, which is 20.1% more than in January-June 2006. Expenses grew at a slightly lower rate (19%) and amounted to RUB 8.9 trillion. It is these indicators that describe the consumer boom going on in Russia - the structure of household spending is changing relatively slowly. If in the first half of 2006 consumer expenses amounted to 70.6%, and expenses for the purchase of goods - 53.6% of cash income, then in the first half of 2007 the corresponding figures are 71.9% and 54.6%. The growth rate of retail trade is still high; in the first half of 2007, its turnover increased (adjusted for inflation) by 14.2% - this is even slightly higher than the growth in real disposable income of the population (11.2%).
Workshop
Consumption independent of income (autonomous consumption) is 1000 rubles. The marginal propensity to consume is 0.5. Based on this data:
1. Plot a graph of the consumption and saving function.
2. Determine the equilibrium level of national income.
3. Construct a graph of the consumption function, assuming that the marginal propensity to consume has increased to 0.8. How has the position of the graph changed compared to the original position (its angle of inclination) and what is the equilibrium level of national income.
4. Construct a graph of the savings function based on the new conditions.
Solution
1. The simplest consumption function has the form
C = C0 + MPC Y,
Where C is consumption,
MPC – marginal propensity to consume,
Y – disposable income
The consumption function in Fig. 1 looks like:
C1 = 1000 + 0.5 Y,
Marginal propensity to consume is the share of increases in spending on consumer goods in any change in disposable income.
Where is the increase in consumer spending,
The savings function looks like:
C = - C0 + MPS Y,
Where S is savings,
C0 – autonomous consumption, the value of which does not depend on the size of current income,
MPS – marginal propensity to save,
Y – disposable income.
The saving function in Figure 2 looks like:
S1 = -1000+0.5*Y
The marginal propensity to save is the share of the increase in savings in any change in disposable income:
Where is the increase in savings,
– increase in disposable income.
Since disposable income is the sum of consumption C and savings S (Y = C + S), then an increase in income causes a certain increase in consumption and savings, therefore MPC+MPS is the increase in income Y.
.
In our case MPS = 1- 0.5 = 0.5
2. To determine the equilibrium level of national income, you need to solve a system of 2 equations:
C=C0+MPC* Y
C = 1000 + 0.5 Y, Since C = Y, then substituting the symbol Y instead of C, we can write: Y = 1000 + 0.5Y therefore the equilibrium level of national income will be Y1 rub. In Fig. 1, the intersection of line 45 0 of the consumption schedule at point E means the level of zero savings. To the left of this point you can see an area reflecting negative savings (i.e. expenses exceeding income - “living on debt”), and to the right – positive savings. Equilibrium is observed only in i.e. only here there is equality of income and expenses.
3. MPC increased to 0.8, follows C2 = 1000 + 0.8 Y, function graph Fig. 2. The greater the MPC, the greater the slope of the consumption function (the curve is steeper. The change in MPC is graphically reflected in the change in the slope of the direct consumption C (Fig. 1).If MPC was 0.5 of the increase in income - straight line C 1, then as a result of an increase in the propensity to consume (MPC = 0.8) - straight line C 2, the total income of society as a whole will increase from Y 1 to Y 2. The equilibrium level of national income will be Y2 rub.
4. MPS decreased to 0.2 due to an increase in MPC, S2 = -1000+0.5*Y follows. The graph of the function is in Fig. 2. The change in MPS is graphically reflected in the change in the tangent of the slope of the savings line (Fig. 2). If MPC increases (straight line C 1 in Fig. 1), then MPS decreases (straight line S 1 in Fig. 2), which naturally leads to an increase in the income of society as a whole.
Conclusion
So, consumption and savings together make up the population's income after taxes.
Consumption is the amount of money that is spent on the purchase of material goods and services used to satisfy the material and spiritual needs of people.
Savings are that part of income that is not consumed, remains unused when spending on current production and consumer needs, and accumulates.
Although savings and consumption are two interrelated categories as components of income, there are nevertheless qualitative differences between them. Firstly, consumption is aimed at meeting the current needs, or requirements, of the population, and savings are aimed at increasing consumption in the future by reducing current consumption. Secondly, if consumption exists in all families, then savings are made only by those families whose incomes exceed the average level. Thirdly, savings can be equal to zero, or they can reach a significant value, i.e. the amplitude of their oscillations is very wide.
According to Keynes's so-called "basic psychological law," "people tend, as a rule, to increase their consumption as their income increases, but not to the same extent as their income increases." To characterize this process, the marginal propensity to consume (MPC) and the marginal propensity to save (MPS) are calculated.
These indicators provide an idea of how much of an additional unit of income families consume and how much they save.
To analyze the impact of consumption and savings on the level of national income, J. Keynes introduces the concepts
Factors that determine the level and dynamics of national income and its distribution are the central problem of macroeconomics for Keynesian theory. Keynesianism considers these factors from the position of implementation in the conditions of the formation of effective demand. In this regard, he focused his efforts on studying the main components of aggregate demand, i.e. consumption and savings, as well as the factors on which the movement of these components of demand as a whole depends. Consumption (C) in total demand is the most significant part; it is an element of GNP, amounting to approximately 50% in Russia, and about 67% in the USA. The share of element C in the total volume of household expenditures in the goods market is even higher. The only component of these expenditures not included in consumption expenditures is the cost of housing construction.
The values of consumption and savings are relatively stable, provided that the state does not take special actions to change them, including through the taxation system. The stability of these values is due to the fact that household decisions to “consume” or “save” are influenced by corresponding traditions. In addition, factors not related to income are diverse, and changes in them often cancel out.
Literature
Textbooks, monographs, collections of scientific papers
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5. Kiseleva E. A. Macroeconomics. – M.: EKSMO, 2005.
6. Course of economic theory / Ed. Chepurina M. N., Kiseleva E. A. - Kirov: Publishing House "ASA", 1997.
7. Lisin V. Macroeconomic theory and policy of economic growth. – M.: Economics, 2004.
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13. Economic theory (political economy) / Ed. ed. Vidyapina V.I., Zhuravlevoy G.P. - M.: INFRA-M, 2005.
Articles from magazines and newspapers
14. Arend R. Sources of post-crisis economic growth in Russia // Questions of Economics, 2005, No. 1.
15. Bulatov A. S. Russia in the global investment process // Economic Issues, 2004, No. 1.
16. Lisin V. Investment processes in the Russian economy // Questions of Economics, 2004, No. 6.
17. Plyshevsky B. Distribution and use of national income // Questions of Statistics, 2005, No. 2.
18. Plyshevsky B. Savings and investments in the Russian economy during the reform period // Economist, 2003, No. 2.
The concept of consumer spending, government consumer spending
Volume of consumer spending, personal consumer spending, consumer spending of the population, structure of consumer spending, growth of consumer spending
Consumer spending is the cost of purchasing goods and paying for services
consumer spending is total expenses for purchasing goods and paying for services. Make up 75 - 80% of total income.
It is part of the national product; are common expenses households for consumer services and goods durable and short-term use, produced domestically and imported from abroad. on consumption consist of autonomous consumption and induced consumption.
The essence of consumer spending
consumer spending cover all current expenses on goods and services, regardless of whether they were paid for in whole or in part during the survey period and whether they were intended for consumption within the household. Consumer spending consists of the cost of purchasing food (including spending on eating out), alcoholic beverages, non-food items and expenses for payment services.
Changes in aggregate demand. Determinants of aggregate demand. factors that shift the aggregate demand curve. Changes in consumer spending may be driven by consumer expectations about future prospects. When people expect their real value to increase in the future benefits, they are willing to spend a significant portion of their current profit. In such a case, current consumer spending increases (current saving decreases), and the aggregate demand curve shifts to the right. At the same time, the expectation of a decrease in real income in the future leads to a reduction in current consumer spending and, consequently, to a fall in aggregate demand.
Patterns of consumer spending vary not only among individuals, but also among countries. One striking feature is that although in the rich countries Households spend more on food in absolute terms than in the poorest countries, but in the latter, food costs occupy a significantly larger share of family budgets.
Reducing consumer spending and increasing the efficiency of trading and intermediary enterprises may be the result of various, but certainly optimization transformations in the company and the technology of product distribution processes. At the same time, the success of such transformations increases if their character is consistent with the nature of those objectively appropriate, progressive economic processes, which form the basis of social development. Among these processes one of the most characteristic is integration. The historical economic development of society has invariably been and continues to be accompanied by the development and gradual strengthening of integration trends. Isn't the best evidence - the implementation of the ideas of the French Emperor Napoleon I on pan-European institutions and currency, which is happening before our eyes?
Structure of final product sales volume consumers within the merchandise distribution segment in 1997. Reducing consumer expenses and increasing the efficiency of trading and intermediary operations enterprises may be a consequence of different, but certainly optimization transformations in companies and technologies of commodity distribution processes. Wherein probability The success of such transformations increases if their character is consistent with the nature of those objectively expedient, progressive economic processes that form the basis of social development. Among such processes, one of the most characteristic is integration.
The structure of consumer spending varies sharply in families with different levels of per capita income. Among poor families, the purchase of goods is mainly concentrated on food, and mainly on cheap products. In families with high incomes, on the contrary, a large share of expenses goes on expensive durable goods, personal vehicles, housing, and a variety of services.
The impact of non-price factors on the aggregate demand curve. A decrease in consumer spending occurs due to a decrease in real benefits, which lowers the aggregate and shifts its curve to the left. Factors that reduce real income and aggregate demand are a decrease in consumer welfare, for example due to falling real estate prices, pessimism about future real incomes, an increase in debt on consumer loans, since part of the profit will be spent on debt repayment, and an increase in income tax rates.
Consumer Expenditure (CPS) based on retail trade volume data is important for the Forex market as it shows the strength of consumer demand and confidence consumers, which are the original data when calculating other economic indicators such as GNP and GDP.
Consumption - consumer expenditures of the population, i.e. the amount of money consumers are willing to spend. Naturally, the ability to spend depends on the level of income and the population’s propensity to save. Consumer income and expenses do not always coincide: at low benefits the capital accumulated over the previous period is consumed at high benefits there is an opportunity for savings.
In the structure of consumer spending, 45 - 52% accounts for the purchase of food products, 33 - 40% - for non-food products and 18 - 22% - for payment services. Conversion into American dollars was carried out quarterly, using the US unweighted Moscow Exchange exchange rate.
Consumption schedule (a and threshold line (b.
Many factors influence the level of consumer spending, but the most important factor is after-tax profit.
In the structure of consumer spending, 45 - 52% is for the purchase of food products, 33 - 40% - for non-food products and 18 - 22% - for paying for services. Conversion to United States dollars was carried out quarterly, from USA unweighted exchange rate of the Moscow Exchange.
Consumption and RD, 1970 - 1994 The level of consumer spending is influenced by many factors. But the most important of them is profit, especially RD. And since savings are the unconsumed part of the RD, the latter is also the main factor determining the volume of personal savings.
In the composition of consumer expenditures of the population, the share of costs for services is increasing, and especially rapidly for high-class services.
In the structure of consumer spending, the main share, as before the reform, falls on the purchase of essential goods, especially food.
Meanwhile, only consumer spending is an element of aggregate demand. That is why it turns out that with a mutually compensating increase in government costs, on the one hand, and taxes- on the other hand, cumulative demand, and therefore the total profit increases (initially by 50 units), and does not remain at the same level.
What is the structure of household consumer spending?
C is the amount of consumer spending, Y is the amount of benefit for the corresponding. Used in Keynesian economics.
A significant slowdown in the growth of consumer spending leads to an increase in inventories of finished products, which affects a decrease in sales volumes and profits, and this, in turn, affects the production of consumer goods and, finally, with a great delay, on producers of raw materials.
Changes in consumer spending patterns depend on the forecasts consumers make. For example, when people believe that their real income will increase in the future, they are willing to spend more of their current income. Therefore, at this time, consumer spending increases (savings decreases during this time) and the aggregate demand curve shifts to the right.
In turn, consumer expenses break down into their autonomous part - Ca and the part that directly depends on the size of the total profit - Su; Cy YxMPC, where MPC is the marginal propensity to consume, equal to the share of an additional unit of household benefit allocated to current expenditure.
What factors influence household consumer spending.
The consumption curve characterizes the ratio of consumer spending to benefits in their movement. The savings curve shows the ratio of savings to earnings as they move.
More than half of total consumer spending comes from services.
In average per capita consumption, statistics track consumer spending and its structure. Expenses include everything to maintain the standard of living (except for the cost of paying taxes and other mandatory payments); their value depends both on income and on the state of the consumer market, which creates opportunities for the realization of income of the population.
During periods when consumer spending exceeds current disposable profit. This situation is possible either as a result of spending part of the existing reserve of savings, or attracting borrowed funds.
What we called household consumption expenditures is defined in the national income accounting system as personal consumption expenditures.
From Keynes's point of view, private consumption expenditures are closely related to their benefits and do not fluctuate sharply. Another thing is that they represent the most fickle, capricious part of aggregate demand. The fact is that organizations invest in expanding production only if they expect to get something out of it. This, in turn, happens when companies expect an increase in demand for their products, which will cover costs and bring profit. So a lot depends on earnings expectations here. And during a recession, they are influenced by pessimistic sentiments, partly justified and partly exaggerated.
The main component of aggregate demand is household consumer spending, which includes all expenses of this sector, from food costs and utility bills to the purchase of cars.
The influence of this factor on the amount of consumer spending at a given level of profit, however, is rather doubtful. In the classical theory of interest, which was based on the idea that the rate percent serves as a factor that balances savings and demand on them, it was convenient to assume that consumption expenditures, other things being equal, show an inverse relationship with the norm percent, so that any increase in the rate of interest will entail a significant reduction in consumption. However, it has long been recognized that the effect ultimately exerted by changes in the rate of interest on the willingness with which people spend on current consumption this or that part of their profits is complex and uncertain: such changes bring into play opposing tendencies, since some of the subjective incentives to save become stronger as the rate of interest rises, while other incentives weaken. Over long periods of time, large changes in the rate of interest are likely to significantly alter social habits and thus affect the subjective propensity to spend, although it is difficult to predict in advance in what direction such an effect will occur. This can only be clarified in the light of accumulated experience. Ordinary short-term fluctuations in the rate of interest are unlikely to have in any way a strong direct impact on the amount of costs.
The influence of this factor on the amount of consumer spending at a given level of income, however, is rather doubtful.
The following diagram shows the structure of consumer spending for a core middle class family consisting of 3 - 4 people.
As a result, savings increase and consumer spending and investments are decreasing. Any holder of a financial resource with an unchanged nominal at the cost(for example, a fixed-term deposit in a bank) receives a real and, moreover, risk-free profit. Investment in a declining economy and large consumer spending, on the contrary, is associated with increased risk.
Purchasing goods and paying for services are the main consumer expenses, accounting for three-quarters of all monetary costs. Their magnitude is determined by: the volume of cash income, which today is not large enough; satisfaction of necessary personal and family needs; retail level prices; climatic and geographical living conditions and other factors.
Depending on the socio-economic category of households, consumer spending varies dramatically. The ten percent group of households with the least available resources in 1998 spent 188 2 rubles per month per member, of which 70 6% went on food and only 13 4% on non-food products.
The formula shows that an increase in consumer spending, investment, government spending and exports leads to an increase in GNP. Increased investment and government spending have a multiplier effect on this growth.
High levels of consumer debt stimulate growth in consumer spending and aggregate consumption.
The mirror relationship between the functions of savings and consumer spending is also evident in the fact that the marginal propensity to save equals one minus the marginal propensity to consume. This dependence is determined by the fact that only what is not saved can be consumed, and only what is not consumed can be saved.
Reflects changes in the market value of the main part of consumer spending, caused by rising prices for goods and tariffs for services.
Reflects changes in the market value of the main part of consumer spending due to changes in prices for goods and tariffs for services.
According to this theory, the total volume of after-tax consumer spending (Ca), gross investment (/s), net exporting(X) and government spending (G) determines the total cost of goods and services sold.
Expenses are divided into:
a) consumer spending;
b) other obligatory payments and voluntary contributions;
c) cash savings and savings.
Personal consumption expenditures are part of the national product; total household expenditure on consumer services and durable and nondurable goods produced domestically and imported from abroad. Personal expenses on consumption consist of autonomous consumption and induced consumption.
Consumer Spending is
Sources
dic.academic.ru - Dictionaries and encyclopedias on Academician
ai08.org - Big technical encyclopedia
glossary.ru - Glossary
Investor Encyclopedia. 2013 .
Every economy needs to redistribute money from those who have it to those who need it. In developed countries, this process occurs within the framework of a modern market economy. But the processes that began in the Russian economy since 1992 are not similar to those considered in traditional economic theories. Therefore, it is necessary to look for new approaches for a systematic analysis of economic mechanisms in Russia during the transition to a new economic system. At the same time, it is necessary to pay attention to the fact that the development of measures to modernize existing economic structures should be carried out taking into account specific problems.
Despite the fairly large volume of research conducted, economic theory has not yet developed a final point of view both on the influence of individual factors on the process of accumulation of personal savings, and on the relationship between the savings of the population and the rate of economic development. Therefore, there is a significant need to formulate a general concept of savings for the population.
The relevance of the work is given by the fact that in modern Russian economic literature very little attention is paid to the problem of activating the investment potential of the population and quantifying the actual savings of the population. But there are also some glimmers. We are talking about methods that appeared in the mid-90s for assessing the financial potential of the population and the possibility of using savings for investment purposes. They are able to fill the gap in the theoretical basis for the study of household savings and allow us to identify a whole range of areas in which new additional research can be conducted.
The purpose of this work is to consider the problems of consumption and savings, their relationship at the present stage of the country’s development.
To achieve the goal, the following tasks must be completed:
1. Determine the essence of consumer spending and list the factors that determine them
2. Define the concept of savings, describe the relationship between consumption and savings.
3. Characterize the features of savings and consumption in the Russian economy.
^
1. Consumer spending and factors that determine it
Consumption is the use of goods, goods, and services to satisfy needs. Consumption is the final phase of the reproduction process, organically connected with its other phases - production, distribution, exchange. The connection with production lies in the fact that production without consumption would lose all meaning and would be aimless, while at the same time without production there would be no consumption. The ultimate goal of all production is consumption.
The general level of consumption of the population in a particular country is determined by the achieved level of development of the productive forces and the degree of social orientation of the country's economy. The level of consumption of individual social strata, groups, classes directly depends on the distribution of the social product, which is ultimately determined by ownership of the means of production, and, consequently, of the created product. Differentiation of consumption is determined by differentiation of income, expressed in the level and quality of goods consumed, and the structure of consumption.
Consumer goods make up approximately 2/3 of the social pie, the remaining 1/3 being investment goods. They are intended to replenish the retiring real capital; in other words, they are spent on productive consumption. The main consumers of produced goods are households, and the main consumers of investment goods are enterprises (firms).
In principle, household consumption can be determined quite accurately. But this presents its own difficulties. Some goods, such as food, drinks, and various services, are consumed immediately. Others, namely durable goods - cars, furniture, homes - are consumed gradually, over a number of years, i.e. we can say that they are consumed in parts. The consumption of these goods is calculated not at their full cost, but at the cost of the amount of services that durable goods provide for a given period of time, for example, for a year.
In economic theory, consumption (C) refers to the total quantity of goods purchased and consumed over a period of time. Consumption is the expression of general consumer, or effective, demand. Consumption has been found to move in the same direction as income. However, consumption depends not only on income, but also on the so-called propensity to consume. The propensity to consume can be average or extreme.
Average propensity to consume (APC) in economics refers to a “psychological factor” that reflects people’s desire to buy consumer goods. . The average propensity to consume is expressed as the ratio of the consumed portion of national income (C) to the total national income (Y), i.e.
APC = Consumption / Income or APC = C / Y (1)
Marginal propensity to consume (MPC) expresses the ratio of changes in consumption to changes in income, i.e.:
MPC = Change in Consumption / Change in Income (2)
This reflects the following functional relationship: when a society's real income increases or decreases, its consumption will increase or decrease, but not at such a rapid rate.
The amount of consumer spending depends on income level. Consequently, MPC will always be less than 1, since income is greater than consumption. This leads to the following conclusions:
MRS = O is when the increment in income is not consumed, but saved;
MPC = 1/2 means that the increase in income will be divided equally between consumption and saving;
MPC = 1 means that the increment in income is completely consumed.
Consumer expenditures of the population or briefly consumption (C) is the most important and largest component of GNP.
The simplest consumption function is:
C = a + b (DI), (3)
where C is consumer spending; a is autonomous consumption, the value of which does not depend on the size of current disposable income; b – marginal propensity to consume; DI – disposable income (income subject to taxes).
Graphically, the propensity to consume (PPC) is presented in Fig. 1.
Rice. 1. Graphic representation of propensity to consume
The x-axis represents disposable or net income. On the y-axis are consumption expenditures. If expenses exactly corresponded to income, then this would be reflected by any point lying on a straight line drawn at an angle of 45°. But in reality, such a coincidence does not occur, and only part of the income is spent on consumption. Therefore, the consumption curve deviates from the 45 line downwards. The intersection of the 45° line and the consumption curve at point B means the level of zero saving. To the left of this point one can observe negative saving (i.e. expenses exceed income - “living on debt”), and to the right – positive saving.
The greater the propensity to consume, the more the consumption line will approach the 45° line and, accordingly, conversely, the lower the propensity to consume, the further the consumption line will be from the 45° line.
J.M. Keynes believed that the main factor determining the amount of consumption is disposable income, i.e. income after taxes. As income rises, consumption rises. Expenses for higher quality, environmentally friendly food are increasing. But there comes a certain limit in spending even on high-quality food products, since human needs for food can be satisfied quickly enough. Products such as clothing, cars, entertainment, and recreation are less susceptible to saturation, and the costs of purchasing them are growing at a rapid pace. The costs of housing, its maintenance and improvement are somewhat more constant, but they also tend to increase significantly with income growth.
That is, the amount that society spends on consumption obviously depends on:
1) partly from the amount of income,
2) partly from other accompanying objective circumstances and
3) partly from the subjective needs and psychological inclinations and habits of individual members of society, as well as from the principles on the basis of which total income is distributed among participants in the economic process (and this distribution may also be subject to modification in the event of expansion of production).
^
2. Savings: essence, types and main factors. The relationship between savings and consumption and their impact on national income
In the economic literature there are a large number of definitions of the concept of “savings”. The simplest definition of the term “saving” is given by David Polfreman and Philip Ford in the book “Basics of Banking” and means “abstaining from spending.”
From this definition we can conclude that the concept of “savings” is the result of the accumulation of wealth by owners, in particular, in the form of cash.
Currently, there are four most common motives for saving among the population:
provision for old age;
precaution;
accumulation for the purpose of bequest;
deferred demand.
Precautionary saving is associated with an individual's feeling of uncertainty regarding the amount of income received and the exact date of death. Since a person does not know exactly what period of time to count on, he creates a certain “stock” of savings, since having an “unused stock” at the time of death is more preferable to him than “overspending” savings before such a moment. As a result, as studies show, the level of savings is influenced not only by the expected temporary distribution of income, but also by their absolute size: the higher the individual’s income level, the greater the excess of savings over the “normal” level, which leads to increased accumulation of wealth by the time of retirement. pension and, as a consequence, to an increased level of consumption in old age.
Research in the US, UK and other countries has shown that the life cycle model contradicts observable phenomena, namely the fact that the population continues to save after retirement. In part, this contradiction can be explained by another motive: the need to accumulate wealth to pass on to subsequent generations.
Pent-up demand is also a motive for personal savings. Deferred demand is the accumulation of the amount necessary to make large expenses, such as buying a house, car, paying for education, etc. The accumulation of savings for these purposes is temporary and is associated with the need to synchronize the moments of income receipt and consumption. An alternative way to synchronize consumption with income generation is a consumer loan, in which expenses are first incurred and then appropriate deductions are made from income.
When considering the main factors influencing savings, it turned out that the main factor determining the amount of savings in households is the level of income after taxes.
But, as in the analysis of demand, in the theory of savings there are factors not related to income:
wealth;
price level;
expectations;
consumer debt;
taxation.
Under the wealth refers to both real estate and financial assets owned by the household. Households save by abstaining from consumption to accumulate wealth. Moreover, the more wealth the population accumulates, the weaker its incentive to save. The amount of household wealth changes slightly from year to year and therefore does not cause serious fluctuations in the quantitative characteristics of savings.
An increase or decrease in the level of prices for goods and services also ultimately affects the amount of savings. That is, changes in the price level change the real value or purchasing power of certain types of values. This assumption can also be justified by the following conclusion: the real value of financial assets, the nominal value of which is expressed in money, will be inversely proportional to changes in the price level. This reflects the connection between saving theory and the wealth effect or the real cash balance effect. However, when analyzing the theory of savings, the assumption is made that the price level in the economy is constant.
The population's expectations related to the future situation in the markets for goods and services are also a significant factor, as they can affect current spending and savings. Expectations of higher prices and shortages of goods lead to lower savings because consumers naturally want to avoid paying higher prices. Conversely, the expected fall in prices and an increase in the supply of goods encourages consumers to increase savings.
Consumer debt and fluctuations in its level make households want to direct current income either to consumption or to savings. If household debt has reached a significant level, consumers will reduce their savings levels. Conversely, if consumer debt is relatively low, household savings may rise.
Changes in taxation also lead to changes in the level of saving, since taxes are paid partly from consumption and partly from saving. Therefore, an increase in taxes will lead to a decrease in the level of savings and, conversely, the share of income received from a decrease in taxes will partially go to the savings of the population, thus causing an increase in the overall level of savings.
So, savings are the funds remaining with the population after paying all taxes and expenses on necessary goods and services. There are main factors that determine the level of savings and motives that encourage the population to make these savings.
When considering the interaction of firms and households in the market for goods and services, a certain proportion of the division of GNP into consumption and savings develops. These two functions interchange and explain each other, so there is a need to consider each of them and identify regular dependencies between them.
Consumption represents the individual and joint use of consumer goods aimed at satisfying the material and spiritual needs of people. In monetary terms, this is the amount of money that is spent by the population on the purchase of material goods and services. Thus, everything that is not savings, does not go as a tax, is not in foreign accounts - this is consumption. The primary unit of consumption is the family. It determines the volume and structure of consumption. The family economy is characterized by a general consumer budget, housing and accumulated property.
People also have a tendency to delay consumption today in the hope that consumption in the future will bring them more utility than in the present.
After defining the terms we need, we will try to answer the question: how is income distributed between consumption and savings? In answering this question, it is important, first of all, to characterize the general properties of the consumption function. The consumption function shows the ratio of consumer spending to income in their movement.
Household personal consumption ^C forms an essential component of effective demand. But if you remember that saving S
represents the excess of income over consumer spending, it will become clear that, when analyzing the factors that determine consumption, we simultaneously consider the factors on which savings depend, i.e. from income and personal consumption:
Y= C+ S, (4)
Where Y– income of the population.
This equation shows that part of the income goes to personal consumption ^C, and the excess takes the form of savings S.
At the same time, society's expenses can be presented, on the one hand, as demand for consumer needs WITH, and on the other – for investment I:
Y= C+ I. (5)
D. Keynes, characterizing the relationship between the volume of national income and consumption expenditures, noted that the level of consumption depends on the level of income. “The psychology of society is such,” wrote Keynes, “that as total real income grows, total consumption also increases, but not to the same extent as income grows.” In formalized form, consumption can be expressed by the following function:
C=C(Y) (6)
However, income is the main factor determining not only consumption, but also savings:
S= S(Y). (7)
In order to construct a savings schedule, you must first consider the consumption function.
The consumption function is shown in Figure 2. Let's consider how this graph is constructed.
The x-axis shows disposable income. On the y-axis are consumption expenditures. If consumption expenditures exactly corresponded to income, then this would be reflected by any point lying on a straight line drawn at an angle of 45°. But in reality, such a coincidence does not occur and only part of the income is spent on consumption. Therefore, the consumption curve deviates downward from the 45° line. The intersection of the line at an angle of 45° and the consumption curve at the point B means zero savings level. To the left of this point you can see negative savings. In this case, expenses exceed income. On the right – savings are positive. The amount of consumption is determined by the distance from the x-axis to the consumption curve, and the amount of saving is determined by the distance from the consumption curve to a line with an angle of 45°. For example, with an income of 2400 den. units the situation is as follows: segment D 1 D shows the size of consumption, and the segment DD 2 – savings amounts.
The saving function, which is a derivative of the consumption function, is considered in a similar way. The savings function shows the ratio of savings to income in their movement (Fig. 3) .
Since what is saved is that part of income that is not consumed, the saving schedule complements the consumption schedule. This is due to the fact that savings and consumption add up to income. 
Rice. 2. Consumption function
To build a savings schedule you need: firstly ,
represent the x-axis in Fig. 2
like the 45° line from fig. .
1;
secondly, on the 45° line from Fig. 1 .
place a mirror - the graph reflected there will be the image of savings in Fig. 2. Point B is the level of income when saving is zero. Below it is negative savings, above it is positive savings. 
Rice. 3 Saving function
Thus, the saving function is a derivative of the consumption function. Savings, like consumption, increase in proportion to income. If income is equal to the subsistence level, savings are equal to zero, since all income is spent on consumption. Savings are spent by households, i.e. become negative if the income of the latter is zero.
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3. Features of savings and consumption in the Russian economy
The average real income of the population in the country over the past two years (2006 and 2007) has increased compared to 2004–2005. The share of income that Russian citizens now receive from entrepreneurial activity and property ownership is also increasing.
According to the State Statistics Committee of the Russian Federation, the population's income from property and business activities is about 20–22%. According to expert estimates, their share is even higher. These incomes largely form a layer of relatively wealthy Russian families. But the income of the majority of our citizens from owning property is extremely small or simply absent, although the formation of a wide layer of owners was proclaimed one of the goals of the reforms. Dividends on the shares of most enterprises are also small, not only because of the modest results of financial activity, primarily in the manufacturing industry, but also due to the flow of a significant part of the financial results of their work through the channels of the “shadow” economy into the hands of a narrow circle of people.
At the same time, it must be borne in mind that the well-being of the population is largely determined not only by its current income, but also by previously accumulated property. Thanks to him, a significant part of Russians, especially pensioners, ensure a completely acceptable existence for themselves with very low incomes.
First of all, this concerns housing. True, in general there is not enough savings for new housing and the housing problem, especially for young families, is very acute. But older people and the rural population are generally relatively well provided with living space (although its quality often leaves much to be desired), and they do not have an urgent need to include in their budget expenses for improving living conditions. They often rent out housing.
Russian families are relatively well provided with necessary household items. According to estimates based on household budget surveys in the past year, they had the necessary household appliances.
Moreover, a fairly good supply of them exists not only among high-income, but also among the lowest-income (according to statistics) families. In particular, the latter have a fairly large share of such relatively new and non-essential items as a video recorder and a video camera.
Another thing is that a significant part of this equipment, as well as furniture and wardrobe items, has a long acquisition period, is physically and morally depreciated and would be replaced under more favorable conditions. But overall, this is a solid foundation for acceptable living conditions even at low income levels.
In general, the incomes of Russians can be characterized as low. According to the budget survey of households (which, however, does not include the wealthiest families), more than half of consumer spending is spent on buying food. Moreover, even in the highest-income families surveyed they exceed 40%. It is also important to note that income concentration is very high in Russia. According to official data, the richest 20% group in January–September 2007 concentrated 48.6% of the population's cash income.
The movement from anti-crisis to income stabilization policy is quantitatively determined by certain parameters. With an annual 5% GDP growth (on average over fifteen years), inflation will be able to be significantly reduced only in the period before 2002–2003; by 2009, we will return to the level of real income of the population in the best case, 1997, in the worst - 1992 ., and until 2025 - try to improve the situation (projected monthly incomes of the population are presented in Table 1.
Table 1. Real monthly incomes of the population until 2015 (at constant prices)
| 1997 | 2001 | 2005 | 2015 |
|
| Income per capita, rub. | 930 | 650 | 910 | 1370 |
| Index by period, % | - | 70 | 140 | 150 |
| Salary, rub. | 950 | 770 | 1150 | 1850 |
| Index by period, % | - | 80 | 150 | 160 |
| Pension, rub. | 328 | 328 | 500 | 720 |
| Index by period, % | - | 100 | 150 | 145 |
Along with an increase in income, we can expect a movement in personal savings. Some recovery in this area is possible in the near future due to the inflationary increase in money in the hands of the population. However, falling confidence in the banking system complicates the situation. The population’s orientation towards dollar savings also has a negative impact,
As a system of incentive measures, we can propose more flexible regulation of loan interest rates and the involvement of Western banks and insurance companies. Another favorable direction is the government’s encouragement of non-bank savings: insurance, pension, medical, mutual funds, credit partnerships of the population itself, etc. At the same time, we need a law on guarantees of deposits, their reinsurance, personal property liability of founders, etc. The activities of banks as an institution for providing various services to clients will be of certain importance. It is also important how the current banking crisis will be resolved for depositors: if with minimal losses, then savings processes will be more successful.
In order to assess the population's propensity to save, the following question was posed in a specialized survey (VTsIOM, 2007). Let's assume that you and your family have a sum of money in the amount of 200 thousand rubles. How are you likely to use this money? (no more than 2 answers).
Answers to it allow us to assess the respondents’ propensity to save and invest, regardless of their current level of income. Among the proposed answer options, the most popular was “I will spend it on purchasing things for the home”: this was stated by 36% of respondents. 29% would put this amount aside “in reserve.” Next come options such as “for my education and the development of my children” (22%), “for my opinion and treatment of close relatives” (19%), “I will try to add and purchase a plot of land, a house, etc.” (12%).
Analysis of respondents' answers using multidimensional scaling procedures showed that the population has four most common strategies for using money. They can be roughly called consumption, savings, insurance and development.
For example, 26% of those who intend to put it aside “in reserve”, 22% of those who want to buy an insurance policy, and 17% of those who are ready to invest in education would spend a large sum of money on treatment. On the other hand, only 4–5% want to spend it on entertainment, put it on deposit in a bank, or put it aside for a long time to save for expensive purchases. Thus, it is possible to determine which investment methods are “close” to each other and which are “far away”.
About 53% of Russians adhere to these four strategies in their pure form (this is the proportion of people who chose options from only one block in answers to this question). At the same time, 19% are focused exclusively on consumption, 6 on savings, 18 on insurance and 10% on development. The remaining 47% of respondents (except for 2% who found it difficult to answer) use mixed strategies, with the most popular of them being consumption/development (13%), consumption/insurance and insurance/development (10% each).
Highlighting a group of particular interest to us: those who are ready to put money in a bank at interest, buy shares or securities, we note that the majority of such people are among: young people (18–24 years old) – 12.3%; students – 13.8; people with an average per capita family income of over 10,000 rubles. per month – 12.1; village residents, villages – 8.4; people with large families (5 people or more) – 9.2; risk-prone people (ready to invest money in a “bank that offers high interest rates but has low reliability”) – 11.2; people with positive investment experience in the past – 17.0%; those who assess the current situation as good and optimistic about the future -14.3%
In addition to these factors, an important role in determining an individual’s financial strategy is played by people’s subjective ideas about what “savings” are, what their size and shelf life should be, which investment instruments are more profitable and which are more reliable. For example, is an amount of 10 thousand rubles, or 50 thousand, or 100 thousand rubles a savings? Or the amount invested in real estate, jewelry, durable goods, etc.? Or the amount you plan to spend over the next month (2-3 months)?
Data from mass surveys show that now in Russian society not only does there not exist any consensus on these issues, but even more than that: the ideas of ordinary people about savings and investments differ in many ways from the classical ideas of economists and financiers.
In order to study the ideas of Russians, determining what in their understanding is “savings,” the following question was posed in a survey (2007): “What do you think, starting with what amount of money can we say that a person has savings; or what is the minimum amount of money that can, in your opinion, be called savings?”
First of all, it should be noted that 11.4% of respondents found it difficult to say anything definite on this matter. An analysis of the responses of everyone else showed that there is not only no single opinion, but not even a dominant one.
The most popular answer is “100 thousand rubles”: this amount was called savings by 22% of respondents. Next comes “50 thousand rubles.” (13%). The distribution of answers by group is presented in Table 2.
Table 2. The minimum amount of money that is savings, according to the respondent (in % of the number of respondents)
Workshop
Consumption independent of income (autonomous consumption) is 1000 rubles. The marginal propensity to consume is 0.5. Based on this data:
1. Plot a graph of the consumption and saving function.
2. Determine the equilibrium level of national income.
3. Construct a graph of the consumption function, assuming that the marginal propensity to consume has increased to 0.8. How has the position of the graph changed compared to the original position (its angle of inclination) and what is the equilibrium level of national income.
4. Construct a graph of the savings function based on the new conditions.
Solution:
The consumption function of income can be expressed by the following formula:
C = C 0 + C y; C 0 > 0; 0
Where WITH 0
– the amount of autonomous (independent of current income) consumption.
C at– marginal propensity to consume.
The consumption function C from income Y has the form:
C = 1000+0.5 y
We will also construct a function of real income C = Y, when real income is equal to expected consumption.
Let's plot the consumption function and the real income function.
A
Rice. 1. Equilibrium national income (with MPC = 0.5)
According to the graph shown in Fig. 1 that the equilibrium national income has indicators corresponding to the coordinates of point A (2000; 2000). Thus, the equilibrium national income with a marginal propensity to consume of 0.5 will be 2000.
Let us assume that the marginal propensity to consume increases to 0.8. Then the graph takes the following form:
A
Rice. 2. Equilibrium national income (with MPC = 0.8)
According to the graph shown in Fig. 2 that the equilibrium national income has indicators corresponding to the coordinates of point A (5000; 5000). Thus, the equilibrium national income with a marginal propensity to consume of 0.8 will be 5000.
Conclusion
Thus, in conclusion, the following conclusions can be drawn.
In economic theory, consumption refers to the total quantity of goods purchased and consumed over a period of time. Consumption is the expression of general consumer, or effective, demand. Consumption has been found to move in the same direction as income. However, consumption depends not only on income, but also on the so-called propensity to consume. The propensity to consume can be average or extreme.
In economics, the average propensity to consume is understood as a “psychological factor” that reflects people’s desire to buy consumer goods. The average propensity to consume is expressed as the ratio of the consumed portion of national income to total national income.
The concept of “savings” is the result of the accumulation of wealth by owners, in particular in the form of cash.
All savings theories consider the level of income of the population as a determining factor. But income is not the only factor affecting savings. Other factors are the structure and level of interest rates, the age structure of the population, and the ratio of urban and rural populations. The nature of the dependence of the level of savings on these factors will become clearer if we analyze the motives for saving.
Currently, there are four most common motives for saving among the population: provision for old age; precaution; accumulation for the purpose of bequest; deferred demand.
The savings function is a derivative of the consumption function. Savings, like consumption, increase in proportion to income. If income is equal to the subsistence level, savings are equal to zero, since all income is spent on consumption. Savings are spent by households, i.e. become negative if the income of the latter is zero.
According to the State Statistics Committee of the Russian Federation, the population's income from property and business activities is about 20–22%. According to expert estimates, their share is even higher. These incomes largely form a layer of relatively wealthy Russian families. But the income of the majority of our citizens from owning property is extremely small or simply absent, although the formation of a wide layer of owners was proclaimed one of the goals of the reforms. Dividends on the shares of most enterprises are also small, not only because of the modest results of financial activity, primarily in the manufacturing industry, but also due to the flow of a significant part of the financial results of their work through the channels of the “shadow” economy into the hands of a narrow circle of people.
In general, the incomes of Russians can be characterized as low. According to the budget survey of households (which, however, does not include the wealthiest families), more than half of consumer spending is spent on buying food. Moreover, even in the highest-income families surveyed they exceed 40%. It is also important to note that income concentration is very high in Russia. According to official data, the richest 20% group in January–September 2007 concentrated 48.6% of the population's cash income.
^
List of used literature
Akindinova N. Propensity of the Russian population to save // Economic Issues 2007 No. 10 – p. 80.
Arkhipov A.I. Economy. M.: Prospekt 2007.-338 p.
Baseler U., Sabov Z., Heinrich J., Koch V. Fundamentals of economic theory: principles, problems, politics - St. Petersburg: Peter, 2006.-359 p.
Borisov E.F., Petrov A.A. Economy. – M.: Finance and Statistics, 2006.-441 p.
Bulatov A.S. Economy. – M.: Yurist, 2005.-601 p.
Vetrov M. Specifics of the savings process of the population of Russia // Economist. 2006 – №9 p. 67–80
Vlasievich Yu. Russian Economy: effects and paradoxes. M.: UNITY-DANA, 2007.-402 p.
Denisov N. Expenses and incomes of the population of Russia // Economics and Life 2008. No. 6. - With. 13–20
How Russians can create and maintain wealth // Finance and Statistics. – 2006. – No. 5. - With. 22–40.
Maksimova V.F. Microeconomics. Income distribution. M.: INFRA. 2007.-279 p.
Modern economics. / Ed. Mamedova O.Yu. – Rostov-on-Don, 2006. – 289 p.
Sokolinsky V. Psychology of income and savings // Financial business. 2007. No. 8 – p. 32–39
Economics: Textbook / Ed. Bulatova A.S., 2nd ed., revised. and additional – M.: publishing house BEK, 2006. – 347 p.
Introduction
Every economy needs to redistribute money from those who have it to those who need it. In developed countries, this process occurs within the framework of a modern market economy. But the processes that began in the Russian economy since 1992 are not similar to those considered in traditional economic theories. Therefore, it is necessary to look for new approaches for a systematic analysis of economic mechanisms in Russia during the transition to a new economic system. At the same time, it is necessary to pay attention to the fact that the development of measures to modernize existing economic structures should be carried out taking into account specific problems.
Despite the fairly large volume of research conducted, economic theory has not yet developed a final point of view both on the influence of individual factors on the process of accumulation of personal savings, and on the relationship between the savings of the population and the rate of economic development. Therefore, there is a significant need to formulate a general concept of savings for the population.
The relevance of the work is given by the fact that in modern Russian economic literature very little attention is paid to the problem of activating the investment potential of the population and quantifying the actual savings of the population. But there are also some glimmers. We are talking about methods that appeared in the mid-90s for assessing the financial potential of the population and the possibility of using savings for investment purposes. They are able to fill the gap in the theoretical basis for the study of household savings and allow us to identify a whole range of areas in which new additional research can be conducted.
The purpose of this work is to consider the problems of consumption and savings, their relationship at the present stage of the country’s development.
To achieve the goal, the following tasks must be completed:
1. Determine the essence of consumer spending and list the factors that determine them
2. Define the concept of savings, describe the relationship between consumption and savings.
3. Characterize the features of savings and consumption in the Russian economy.
Consumer spending and factors that determine it
Consumption is the use of goods, goods, and services to satisfy needs. Consumption is the final phase of the reproduction process, organically connected with its other phases - production, distribution, exchange. The connection with production lies in the fact that production without consumption would lose all meaning and would be aimless, while at the same time without production there would be no consumption. The ultimate goal of all production is consumption.
The general level of consumption of the population in a particular country is determined by the achieved level of development of the productive forces and the degree of social orientation of the country's economy. The level of consumption of individual social strata, groups, classes directly depends on the distribution of the social product, which is ultimately determined by ownership of the means of production, and, consequently, of the created product. Differentiation of consumption is determined by differentiation of income, expressed in the level and quality of goods consumed, and the structure of consumption.
Consumer goods make up approximately 2/3 of the social pie, the remaining 1/3 being investment goods. They are intended to replenish the retiring real capital; in other words, they are spent on productive consumption. The main consumers of produced goods are households, and the main consumers of investment goods are enterprises (firms).
In principle, household consumption can be determined quite accurately. But this presents its own difficulties. Some goods, such as food, drinks, and various services, are consumed immediately. Others, namely durable goods - cars, furniture, homes - are consumed gradually, over a number of years, i.e. we can say that they are consumed in parts. The consumption of these goods is calculated not at their full cost, but at the cost of the amount of services that durable goods provide for a given period of time, for example, for a year.
In economic theory, consumption (C) refers to the total quantity of goods purchased and consumed over a period of time. Consumption is the expression of general consumer, or effective, demand. Consumption has been found to move in the same direction as income. However, consumption depends not only on income, but also on the so-called propensity to consume. The propensity to consume can be average or extreme.
Average propensity to consume (APC) in economics refers to a “psychological factor” that reflects people’s desire to buy consumer goods. . The average propensity to consume is expressed as the ratio of the consumed portion of national income (C) to the total national income (Y), i.e.
APC = Consumption / Income or APC = C / Y (1)
Marginal propensity to consume (MPC) expresses the ratio of changes in consumption to changes in income, i.e.:
MPC = Change in Consumption / Change in Income (2)
This reflects the following functional relationship: when a society's real income increases or decreases, its consumption will increase or decrease, but not at such a rapid rate.
The amount of consumer spending depends on income level. Consequently, MPC will always be less than 1, since income is greater than consumption. This leads to the following conclusions:
MRS = O is when the increment in income is not consumed, but saved;
MPC = 1/2 means that the increase in income will be divided equally between consumption and saving;
MPC = 1 means that the increment in income is completely consumed.
Consumer expenditures of the population or briefly consumption (C) is the most important and largest component of GNP.
The simplest consumption function is:
C = a + b (DI), (3)
where C is consumer spending; a is autonomous consumption, the value of which does not depend on the size of current disposable income; b is the marginal propensity to consume; DI - disposable income (income subject to taxes).
Graphically, the propensity to consume (PPC) is presented in Fig. 1.
Rice.
The x-axis represents disposable or net income. On the y-axis are consumption expenditures. If expenses exactly corresponded to income, then this would be reflected by any point lying on a straight line drawn at an angle of 45°. But in reality, such a coincidence does not occur, and only part of the income is spent on consumption. Therefore, the consumption curve deviates from the line 45? down. The intersection of the 45° line and the consumption curve at point B means the level of zero saving. To the left of this point one can observe negative saving (i.e. expenses exceed income - “living on debt”), and to the right - positive saving.
The greater the propensity to consume, the more the consumption line will approach the 45° line and, accordingly, conversely, the lower the propensity to consume, the further the consumption line will be from the 45° line.
J.M. Keynes believed that the main factor determining the amount of consumption is disposable income, i.e. income after taxes. As income rises, consumption rises. Expenses for higher quality, environmentally friendly food are increasing. But there comes a certain limit in spending even on high-quality food products, since human needs for food can be satisfied quickly enough. Products such as clothing, cars, entertainment, and recreation are less susceptible to saturation, and the costs of purchasing them are growing at a rapid pace. The costs of housing, its maintenance and improvement are somewhat more constant, but they also tend to increase significantly with income growth.
That is, the amount that society spends on consumption obviously depends on:
1) partly from the amount of income,
2) partly from other accompanying objective circumstances and
3) partly from the subjective needs and psychological inclinations and habits of individual members of society, as well as from the principles on the basis of which total income is distributed among participants in the economic process (and this distribution may also be subject to modification in the event of expansion of production).