Affluence in general terms refers to the abundance of wealth and material goods. It signifies that there is a level of economic prosperity and a comfortable standard of living is there where the basic needs are well beyond satisfied. In economics, the term affluence is often discussed about income distribution, consumer behaviour, and the economic policies aimed at achieving or managing wealth within a society.
Let us understand in simple terms. Imagine, that you can buy whatever you need which not only includes necessary things such as food, shelter, and other things but you can buy all the latest gadgets, and nice branded clothes and go on vacations without worrying about the cost. So, affluence is that situation wherein people have more than enough money to enjoy a luxurious and comfortable life and this allows people to afford extra and comfortably save for the future.
The concept of affluence holds a central place in the discussion about economic development, inequality, and sustainability. Economists study how the concept of affluence affects consumption patterns, savings rates, and investments as well as its impact on resources and the environment. It also plays a vital role in understanding the social dynamics which includes the distribution of wealth and the economic divide between the various groups in the society.
In affluent societies, consumers spend a larger share of their income on luxury goods, services, and leisure activities which creates a market for diverse and sophisticated goods and services. This also is used to devise newer economic policies such as progressive taxation which is used to address the disparities in the affluence among the various sections of the society to redistribute the wealth of the nation more equitably across the population of a country.
Source: A to Z of Economics by Dr. NC Raghavi Chakravarthy