The Engel's coefficient in Beijing dropped to 31.8 percent in 2005, down 4.5 percent against the year 2000, according to a survey made by the Beijing municipal statistical bureau and the National Statistics Bureau's Beijing Office.

The decline in the Engel's coefficient indicates the life of Beijing people has changed from being merely food-and-clothes sufficient to well-off, according to the standards set by the Food and Agriculture Organization of the United Nations.

The survey shows tremendous changes in the consumption of Beijing residents. Last year, the per capita GDP of Beijing residents surpassed US$5,000 and the per capita consumption payout amounted to 13,244.2 yuan. The current 31.8 percent of the Engel's coefficient indicates that the current figure matches with Beijing's economic development.

Some experts say that the Engel's coefficient in some developed countries remains at 20 percent or so, suggesting that Beijing still has a long way to go.

Experts also point out that some factors like oil price hike and dinner service charge rise may affect the Engel's coefficient. Besides that, continuous high expenses on current medical treatment, education and house also affect the Engel's coefficient.

Formulated by German-born statistician Ernst Engel in 1857, Engel's Law states that as incomes increase, the proportion of income spent on food falls. Engel's Law is accepted as a basic principle of income and consumption.

The Engel's coefficient is a major indicator of people's living standard in a country or region. According to the measures set by the Food and Agricultural Organization of the United Nations, an Engel's coefficient above 59 percent represents absolute poverty; 50-59 percent, barely enough food and clothing; 40-50 percent, a "moderately well-off" standard of living; 30-40 percent, a "well-to-do" standard of living; and below 30 percent, a "wealthy" life.

(People's Daily February 21, 2006)