Ernst Engel, 1821-1896, was a Prussian statistician, founder of the International Statistical Institute and from 1860 to 1882 he was director of the Prussian statistical bureau in Berlin. However, he is best known for the formulation of his Engel’s law, deriving on what is known as the Engel curve.
Engel developed his famous curve in his book “Die Productions- und Consumtionsverhältnisse des Königreichs Sachsens” 1857, from observing and collecting data of the consumption patterns of Belgian working-class families, and he related their level of income with their expenditure in food and other goods. He observed that households with higher incomes tended to allocate a lower share of their income to food than poorer households. The Engel curve captures this inverse relation. His law is a reflection of this phenomenon and states this same relation. As Engel himself expressed, the implication of this law is very interesting in the macroeconomic sense as it implies that the higher the economic development of a country, the lower the share of agriculture will be in aggregate production.