Spending and investment linked
Comparing Gross capital formation (current LCU) with Households and NPISHs Final consumption expenditure (constant LCU), per unit of GDP across 170 countries, 2004–2025.
- Rank correlation
- +0.67
- Holding size constant
- +0.77
- Countries compared
- 170
- Period
- 2004–2025
What might link these
The relationship between household consumption expenditure and gross capital formation might be driven by a country's overall economic activity, with more prosperous economies exhibiting both higher consumption and investment. A careful reader should consider the potential role of education or institutional stability as a confounder. The correlation could be influenced by these underlying factors rather than a direct link between the two indicators.
Why this is not proof of anything
This is a correlation across countries, not an experiment. It cannot show that either indicator causes the other, and both may simply follow a third thing. This correlation could mislead by implying a causal relationship between consumption and investment, when in fact both may be driven by broader economic conditions.
The second figure above repeats the measurement with national population and income held constant. It is the more conservative number: a relationship that largely disappears there was mostly telling you that larger, richer countries have more of most things.
How this was measured
Both indicators were ranked across every country reporting each, and the two rankings compared — ranks rather than raw values, because a handful of very large countries can otherwise manufacture a relationship on their own. The calculation is arithmetic over figures already published on this site; the commentary above is drafted from the two indicator names and the resulting coefficients.