The main factor determining the size and structure of demand in the consumer market are personal incomes of the population. The income factor, unlike the price, is considered to be a direct determinant of demand. The nature of this dependence was expressed in due time by J. M. Keynes, who wrote that the tendency of people to increase their needs, and, after this, of course, consumption, is a special psychological law of human nature, which ultimately entails to increase it and personal disposable income.
In principle, the absolute income hypothesis was even earlier formulated and developed by E. Engel. According to the well-known Eingel’s law, the structure of purchases and expenses of the population can vary significantly depending on the level of income: the lower the income, the more it is spent on food (satisfying human needs) and, conversely, the higher the income level, the greater part of it goes to satisfaction of the "secondary" needs of man as a social object. In addition, it is significant that, as a rule, a 1% increase in income among low-income groups of the population, as a rule, provokes a more active consumer response than the same indicator among the wealthy layers.
In theoretical terms, the problem of how the personal income of income and market conditions are interconnected has been studied mainly in the aspect of the influence of the purchasing power of the population on the value of goods turnover. However, the interaction of population incomes and the consumer goods market , in our opinion, should be considered on a broader plane, namely: from the perspective of a systematic approach to the analysis of the unity of supply and demand. Successful and dynamic development of the consumer market in the region, achieving balance therein are directly related to measures of state regulation of income, which are aimed at stabilizing the standard of living, creating a middle class of consumers, expanding consumer demand, stimulating the production of goods and services.
Personal income in economic theory is traditionally defined as a certain amount of money that a person receives for any period. But in a market economy, this approach to determining what constitutes personal income needs a number of significant refinements. The reason for this is that, firstly, in a market economy, personal income is directed mainly to the purchase of goods and services for personal consumption. And secondly, in a market economy, any personal income must be provided with an appropriate amount of these same goods and services, because only under this condition does a person retain a material interest in work.
In a regional aspect, household incomes are the dominant factor determining the success of the formation and subsequent development of the consumer market.
It has been theoretically proved that demand, which initiates the supply volume on it, is a derived parameter from indicators of the amount of cash income that the population directs to consumer needs and determines their level of well-being.
In assessing the level of income from the standpoint of its influence on solvent demand in the market of consumer services and goods, the important thing is to correctly determine the value of purchasing power, which is determined by adjusting cash incomes taking into account prices and acts as real income.
However, at present it is necessary to objectively judge the real parameter of the solvent demand of the population by introducing both indicators of the structure of expenditures and the harmony of their relationships.