ABSTRACT
The chapter begins with a description of the data sets used and of the way in which they were used. It presents data from the Poverty and Social Exclusion survey and uses this to explore how spending is constrained by income. If individuals report that they would purchase items, but for lack of money, it follows that an income increase should lead to greater consumption. The relationship between disposable household income and various types of consumption was regressed to show, on average, how much extra we may expect pensioners to spend on various items with increased income. Having demonstrated that poorer pensioners are generally more likely to report the lack to necessities it is reasonable to conclude that increased income stimulates extra spending. The Family Expenditure Survey analysis is exploratory in that it uses regression analysis of differences in spending patterns by income to predict likely changes in consumption following an income increase.
