Engel’s coefficient of urban residents in China has been falling much faster th an before since 1996 with the following abnormal phenomena:(1) Comparing with that of 1996,Engel’s coefficient fell instead of rising,when per capita real disposable income of the urban households with lowest income decreased in 2002 ;(2) Households’ real disposable income increased faster,while their Engel ’s index fell more slowly. This paper,making use of the survey data on urban r esidents’ income and expenditure by levels of income in each year from 1996 to 2002, and Modern econometric model,did the empirical research on above phenomen a and reached the conclusions:(1) Both crowd-out-effect and restrain effect on food consumption contributed by excessively fast rise of tuition,child care fee and health care service expense were the main reasons for the distortion of Engel’s coefficient,because consumption on education and health care was produ ctive consumption.(2) Rising in prices of education and medicine care made rem arkable impact on the proportion of food expenditure in households with middle a nd low income. The impact showed more tremendous in lower income households,but milder in households with high and highest income; however,disposable income h ad the opposite effect on Engel’s coefficient. That means rising of productive consumption expectation price was the main reason for descending of proportion o f food expenditure in households with middle and low income.
