Objective Factors: 

(i) Income Distribution: 

• If there is large disparity between rich and poor, the consumption is low because the rich people have low propensity to consume and high propensity to save.

(ii) Price level: 

• Price level plays an important role in determining the consumption function. 
• When the price falls, real income goes up; people will consume more and propensity to save of the society increases.

(iii) Wage level:

• Wage level plays an important role in determining the consumption function and there is positive relationship between wage and consumption.
• Consumption expenditure increases with the rise in wages. 
• Similar is the effect with regard to windfall gains.

(iv) Interest rate:

• Rate of interest plays an important role in determining the consumption function. 
• Higher rate of interest will encourage people to save more money and reduces consumption.

(v) Fiscal Policy: When government reduces the tax the disposable income rises and the propensity to consume of community increases.

(vi) Consumer credit: 

• The availability of consumer credit at easy installments will encourage households to buy consumer durables like automobiles, fridge, computer. 
• This pushes up consumption.

(vii) Demographic factors:

• Ceteris paribus, the larger the size of the family, the grater is the consumption. 
• Besides size of family, stage in family life cycle, place of residence and occupation affect the consumption function.

(viii) Duesenberry hypothesis: Duesenberry has made two observations regarding the factors affecting consumption.

• The consumption expenditure depends not only on his current income but also past income and standard of living. 
• Consumption is influenced by demonstration effect. The consumption standards of low income groups are influenced by the consumption standards of high income groups..

(ix) Windfall Gains or losses: Unexpected changes in the stock market leading to gains or losses tend to shift the consumption function upward or downward.