What this calculator does
Marginal propensity to consume, MPC, measures how much of an extra dollar of income gets spent rather than saved. It is a core building block of macroeconomics, used to work out spending multipliers and to model how a change in income ripples through an economy or a household budget.
The mpc formula itself is simple: divide the change in consumption by the change in income that caused it. This calculator handles that division and also shows the implied marginal propensity to save, since the two always add up to 1 when spending and saving are the only two places extra income can go.
The formula
Subtract the earlier consumption figure from the later one to get the change in consumption, and do the same for income. MPC is the change in consumption divided by the change in income. The marginal propensity to save is simply 1 minus MPC, since any dollar of extra income not spent is, by definition, saved.
| Term | Meaning |
|---|---|
| MPC | Marginal propensity to consume: the share of an extra dollar of income that goes to spending, ΔConsumption ÷ ΔIncome. |
| ΔConsumption | The change in consumption spending between the two income levels being compared. |
| ΔIncome | The change in income between the two periods or scenarios being compared. |
| MPS | Marginal propensity to save: the share of an extra dollar of income that is saved instead of spent, 1 − MPC. |
The inputs explained
| Field | What to enter |
|---|---|
| Consumption before ($) | Consumption spending at the earlier, lower income level. |
| Consumption after ($) | Consumption spending at the later, higher income level. |
| Income before ($) | Income at the earlier point being compared. |
| Income after ($) | Income at the later point being compared. |
When to use it
Working a textbook or exam question
Given a before-and-after consumption and income figure, this calculator applies the mpc formula directly and shows the working, which is how to calculate mpc for a standard macroeconomics problem.
Estimating a spending multiplier
MPC feeds directly into the simple Keynesian multiplier (1 ÷ (1 − MPC)), so knowing MPC from real or assumed figures is the first step before that calculation.
Comparing spending behaviour across income levels
A higher MPC suggests a larger share of extra income gets spent rather than saved, which is a common assumption made about lower-income households relative to higher-income ones.
Worked examples
Every figure in the tables below is produced by this page’s own calculator at build time, so the numbers and the tool always agree. Select any row to load that scenario.
How MPC changes as the rise in consumption grows, at a fixed rise in income
Income rising by a fixed $10,000, against a range of consumption increases.
| Consumption after | MPC | Implied marginal propensity to save (1 − MPC) |
|---|---|---|
| $42,000 | 0.200 | 0.800 |
| $44,000 | 0.400 | 0.600 |
| $46,000 | 0.600 | 0.400 |
| $48,000 | 0.800 | 0.200 |
| $50,000 | 1.000 | 0.000 |
| $55,000 | 1.500 | -0.500 |
How MPC changes as the rise in income grows, at a fixed rise in consumption
Consumption rising by a fixed $4,000, against a range of income increases.
| Income after | MPC | Implied marginal propensity to save (1 − MPC) |
|---|---|---|
| $55,000 | 0.800 | 0.200 |
| $60,000 | 0.400 | 0.600 |
| $70,000 | 0.200 | 0.800 |
| $80,000 | 0.133 | 0.867 |
| $100,000 | 0.080 | 0.920 |
| $150,000 | 0.040 | 0.960 |
Questions
What is the mpc formula?
MPC = change in consumption ÷ change in income. Both changes are measured between the same two points, such as before and after a pay rise.
How do you calculate mpc from a table of income and consumption figures?
Pick two rows, subtract the earlier consumption from the later one, subtract the earlier income from the later one, then divide the first difference by the second.
Can MPC be greater than 1 or less than 0?
In theory MPC normally sits between 0 and 1, since spending an extra dollar of income more than once is not possible from that income alone. In practice, figures drawn from real or noisy data can produce a result outside that range, usually a sign that other funding, such as borrowing or drawing down savings, is affecting consumption alongside the income change.
How is MPC used beyond this one calculation?
MPC is the key input to the simple spending multiplier, 1 ÷ (1 − MPC), which estimates how much a change in spending eventually changes total economic output once that spending circulates through the economy.
To see how a related cost figure changes at the margin rather than income and consumption, see the marginal cost calculator.