| Abstract: | This note attempts to develop a method of measuring the impact of changes in income distribution on future demand, an important consideration when a country is experiencing a rapid rise in per capita income. Cross-sectional analysis utilising the Lorenz coefficient focuses on the impact of income inequality on the demand for mutton in urban Iran. It is hypothesised that long-term projections of demand using traditional methodology will over-estimate future consumption as a result of failure to consider deterioration in income distribution. The hypothesis is substantiated for this example. It is concluded that current income distribution and the alterations in income inequality which may accompany increased per capita income must be taken into account when estimating changes in aggregate future demand. |
