Named after Ernst Engel (1821-1896), German economist and statistician, who introduced this theory in a paper in 1857.
In his studies, Engel found that the feebler the economy of a family, the higher the percentage of its budget spent on food - and vice versa. That is, as the level of income increases, so do the food expenditures, but the increase for the latter is less in percentage.
"Engel's curve" refers to the relationship between the various quantities of goods consumers are willing to purchase at varying income levels.
Sources:
http://fr.encyclopedia.yahoo.com/articles/e/e0002360_p0.html
http://faculty.washington.edu/krumme/resources/engel.html
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