Consumer Demographics - Essay Example

Download file to see previous pages Note that the gap between Income and consumption widens as income rises. At a particular age (maybe due to retirement) income earned reaches its peak and therefore starts declining and hence the hump shape. Consumption, on the other hand, reduces but still at a lower rate (the gap starts reducing). The saved income is consumed during this stage. In a nutshell, individuals are assumed to understand the life cycle of their income and thus use it to control their lifetime expenditure.

The diagram in part 2 indicates that both expenditure and income increase at a young age reaches a peak at the age of 40 and then starts declining. As a matter of fact, 25 is working age and thus it’s expected that income exceeds expenditure. As income increases, expenditure increases. At 40, many individuals retire, their efficiency reduces and thus income starts declining. Consumption also follows the trend households trim their expenditure possibly due to low activity. The increase in the amount of savings (the excess of income over expenditure), after 40 years might have resulted from the fact that individuals do not only save during working age but also invest. Income from previous investments, pensions among other old-age benefits attributes to this deviation from the life cycle theory expectations.

Among the many factors influencing economic growth and development, the size of the population, population composition, as well as the rate of population growth plays an important role. Population growth refers to the rate at which the number of persons in a population decreases or increases over time. Overpopulation, especially in the developing and underdeveloped countries lies among the many retardants of economic growth basically, the population has had both positive and negative impacts on food consumption, changes in per capita income, market growth, and economic growth at large. 

Consumption influences output and economic growth via the multiplier effect. Factually, an increase in population is expected to increase consumption. Food is a necessity and an increase in population would definitely increase food consumption. ...Download file to see next pages Read More