Nichthomothetische

Nichthomothetische, or non-homothetic in English, is a term used in economic theory to describe consumer preferences or demand patterns in which proportional changes in income produce non-proportional changes in the quantity demanded of different goods. It stands in contrast to homothetic preferences, where income growth leads to proportional adjustments in all goods and to constant expenditure shares across the budget.

In non-homothetic demand, budget shares are not fixed as income changes. Engel curves for different goods are not simple scaled versions of each other, and the income elasticity of demand can vary with the level of income. This means that the proportion of income spent on a given good can rise or fall as people become richer, leading to shifting patterns of consumption across the income distribution.

Common examples appear in everyday consumption: basic necessities such as food or housing often absorb a larger share of income at low income levels, while the shares devoted to luxury or discretionary goods tend to rise with income. Non-homotheticity can arise from genuine changes in preferences, subsistence constraints, or varying availability and desirability of substitutes across income groups.

In practice, recognizing non-homotheticity matters for demand forecasting, tax and welfare analysis, and development economics. It implies that policy effects and welfare outcomes may differ across income groups and over the income distribution, making segmentation and income-specific analyses important. Economists test for non-homotheticity by examining how budget shares and Engel curves evolve with household income.