In order to comprehend the ontological construction below, please refer to the respective posts for all notions in italic.
The income effect conjugates the change in income to the specific function of different commodities on the market. Wealth accumulation, which is intrinsic to the market process, subdues the demand and the supply for an economic good to changes in the income that can buy it. The function of a commodity on the market is given in relation to the relative amount of income it is capable to command; so the market character of the good is described through the distribution of particular income to it. Commodities' marketing is driven by the disposition of income effect in inferior goods, luxury goods, and normal goods.
Historical Backdrop
• ERNST ENGEL The Cost of Living for Belgian Working Families Earlier and Now: income and goods.
• VILFREDO PARETO Manual of Political Economy: income distribution.
• JOHN HICKS Value and Capital: income effect.
• FRANCO MODIGLIANI The Life Cycle Hypothesis of Saving, the Demand for Wealth and the Supply of Capital: income cycle.