Economics
The concept is proportion of income devoted to a good typically applies to discussions about the price elasticity of demand. The basic concept of price elasticity of demand is that it is relational to the percentage change in the price of a good. But the proportion of income devoted to a good will have an impact on the elasticity. The best way to illustrate this is by comparing two different products.
A person pays rent, and they like to buy a coffee every morning. If their rent is $1,000 per month and the coffee is $2 per day (so $40 per month). The price of each increases by 10%. The percentage price increase is the same, but the rent is a much larger proportion of income. So the increase in the price of rent is $100, and the increase in the price of coffee is $4. The consumer is going to be much more conscious of the rent increase. That extra $100 may spur a decision to move, where the extra $4 is unlikely to spur a change in coffee consumption -- especially when it is 20 cents per day. If the person's income is $3,000, then the $100 represents 3.3% of that. The coffee increase is 0.13%, so a much smaller proportion, and a figure much less likely to draw a response from the consumer.
What this shows is that the greater the proportion of income that a good is, the higher the price elasticity of demand should be for that good. Consumers are simply more sensitive to what are larger dollar value changes in price; the percentage change does not matter much when the proportion of income is vastly different.
E1. If these figures are taken on aggregate to deliver a statistically-significant sample, this would work as follows. For every 100 people, an additional $100 in rent would be worth moving over. This is $1,200 per year, and the place just isn't worth it. Moving is a nuisance, so not everybody is going to move over $100, but let's say that 30 people out of 100 move. This is 30% of the total...
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