Autonomous consumption is the minimum amount of spending that households must make regardless of how much money they earn. This spending occurs even if a household’s income falls to zero.

Formula: C = a + bY (In this formula, when income Y is 0, consumption C equals a).

Key features:

• It is the foundational level of spending that does not change based on current income levels.
• When income is zero or very low, people cover these costs through borrowing or past savings (known as dissaving).
• It represents essential needs, such as food, shelter, and electricity.
• A higher amount of autonomous consumption often indicates a higher standard of living.
• In economic models, it shows that consumption does not start at zero on a graph.
• It can be affected by changes in wealth, access to credit, or social support programs.
• It is a key part of aggregate demand in an economy.