Articles on Islamic Economics

Islamic Texts on Consumption and Spending

Salman Ahmed Shaikh

Islam has its own distinct worldview. The theistic concepts of Tawheed, Khilafah and Akhirah govern the Islamic way of life. The concept of Tawheed implies that all living and non-living things are created by Allah. The concept of Khilafah engenders stewardship for the responsible use of resources. The concept of Akhirah inculcates a comprehensive sense of accountability before Allah for the moral content in economic and non-economic choices in life. The moral institutions in the Islamic framework also govern human-to-human socio-economic relations and interactions in life. This article looks at some of the descriptive and prescriptive teachings of Al-Quran and Sunnah (Ways of Prophet Muhammad [pbuh]) on consumption and spending behaviour. Al-Quran and Sunnah together constitute the fundamental sources of the religion of Islam. First, the descriptive postulates about human nature in the Islamic texts are mentioned. Then, an account of prescriptions in Islamic texts regarding consumer behaviour in the realm of seeking endowments and spending these endowments on self-consumption and charitable spending is provided.

Descriptive Postulates about Human Nature

Al-Quran gives some descriptive statements about human nature which can help in understanding human behaviour in general as well as economic choices in particular. These descriptions could form the positive postulates in analysing a Muslim’s consumption behaviour. Al-Quran mentions that humans are generally hasty (Al-Quran, Al-Isrā 17: 11), miserly (Al-Quran, Al-Isrā 17: 100), impatient (Al-Quran Al-Ma’arij 70: 19) and have love of wealth (Al-Quran Al-ādiyat 100: 8). Thus, humans have impatience, positive time preference, tendency to economize on expenditure and desire for material resources.

Islamic texts mention consumption externalities and the desire to consume positional goods and indulging in conspicuous consumption (Al-Quran Al-Takāthur 102: 1-2). According to Islamic texts, human instinct prefers goods which serve survival needs as well as other wants which serve aesthetic desires (Al-Quran Al-‘Imrān 3: 14). The story of Jews asking Moses (pbuh) for a variety of food (Al-Quran Al-Baqarah 2: 61) also hints at the desire for variety in consumption bundles. This is also the basis of diminishing marginal utility in the mainstream consumer theory.

In a Hadith, Prophet Muhammad (pbuh) said: “If Adam’s son had a valley full of gold, he would like to have two valleys, for nothing fills his mouth except dust (of the grave)…”[1] This also hints at the instinctive desire of humans for non-satiated preferences. Prophet Muhammad (pbuh) said: “The heart of an old man remains young with regards to two things: Love of life and wealth.”[2] However, the next sub-sections explicate how Islamic teachings prescribe guidelines for moderating these instincts and inculcating empathy in conduct and behaviour.

Moral Filtering on Seeking Endowments

Now, we discuss how the Islamic teachings govern the pursuit of earning incomes. The Islamic teachings encourage striving for Halāl means of earning (Al-Quran Al-Mulk 67: 15) as long as impermissible means and ways of earning are avoided, such as interest (Al-Quran Al-Baqarah 2: 276), bribery (Al-Quran Al-Baqarah 2: 188), fraud (Al-Quran Al-Mutaffifeen 83: 1-4), gambling (Al-Quran Al-Maidā 5: 90), theft (Al-Quran Al-Maidā 5: 38), business of intoxicants (Al-Quran Al-Maidā 5: 90) and prostitution (Al-Quran Al-Nur 24: 19), for instance.

Islamic principles do not deny self-interest; rather they purify the self-interest through a social, moral and religious filter. A Muslim consumer will not only operate under a budget constraint, but also under moral constraints. Looking at the rationale of these injunctions, it can be appreciated that bribery, fraud and theft can undermine social and governance infrastructure leading to loss of confidence in contract enforcement and thereby, these factors can have negative socio-economic implications. Gambling based contracts and trading methods can bring unnecessary speculation and thereby, they may increase systematic risk in the financial markets as shown in the negative effects of contingent financial derivatives in the global financial crisis of 2007-09. Furthermore, the business of prostitution undermines the very basis of human dignity. Intoxicants also undermine the rational faculties which humans have. Active moral conscience checks immoral behaviour, else drunkenness increases the risk of reckless behaviour. In general, barring the above exceptions, Al-Quran allows mutually beneficial and consensual exchange (Al-Quran Al-Nisā 4: 29). Endowments bestowed by Allah are to be used for material goods as well as for societal causes to earn Falah, i.e. well-being in both worlds .

Islam discourages idleness, dependency and unnecessary exit from the labor force. Prophet Muhammad (pbuh) said: “For one of you to go out early to gather firewood and carry it on his back so that he can give charity from it and be free of need from the people, is better for him than to ask a man who may give that to him or refuse. Indeed, the upper hand (giving) is more virtuous than the lower hand (receiving), and begin with (those who are) your dependents.”[3] In another Hadith, Prophet Muhammad (pbuh) explained: “The upper hand is better than the lower hand, and the upper hand is the one that spends, and the lower hand is the one that asks.”[4] Prophet Muhammad (pbuh) said that begging is not lawful for the rich and physically fit except for the one who is severely poor or in perilous debt.[5]

Divine Will on Endowment Inequality

According to the Islamic teachings, this worldly life is a trial for humans in which they are being tested for their thankfulness and obedience to Allah (Al-Quran Al-Mulk 67: 2). In this test nature of life, Allah has given unequal endowments to humans so that they employ each other (Al-Quran Al-Isrā 17: 30; Al-Ankabut 29: 62; As-Saba 34: 39; Ash-Shura 42: 12 and Az-Zukhruf 43: 32). The divine will on endowment inequality is also a means to test their thankfulness and patience.

Allah in Al-Quran says that had it not been a very difficult trial for the believers, Allah will have made every house of the non-believer with gold and silver (Al-Quran Az-Zukhruf 43: 33-34). Thus, Al-Quran asks Muslims: “And strain not your eyes in longing for the things We have given for enjoyment to various groups of them, the splendour of the life of this world that We may test them thereby. But the provision (good reward in the Hereafter) of your Lord is better and more lasting.” (Al-Quran Tāhā 20: 131). Nevertheless, Islam does not approve extractive institutions such as Ribā (usury) and public policies which result in concentration of wealth.  Islam accords due importance to redistribution and reducing the concentration of wealth in few hands (Al-Quran Al-Hashr: 7).

Moral Filtering on Consumption Set

Previously, we looked at how the Islamic principles govern activities related to earning a livelihood. This sub-section discusses the checks and filters which Islamic texts prescribe for consumption behaviour of Muslims. Islamic teachings make a distinction between permissible and impermissible goods. Al-Quran allows eating lawful and good things on earth (Al-Quran Al-Baqarah 2: 168; Al-Nahl 16: 114; Al-Mu’minun 23: 51). On the other hand, the impermissible goods are axiomatically excluded from the consumption bundle. Consumption opportunity set axiomatically filters out the prohibited consumption goods from the consumption set in both contemporaneous and intertemporal consumption. Thus, the ordinal preferences do not apply to the axiomatically excluded non-Halāl goods and services. For instance, Islam forbids intoxicants (Al-Quran Al-Baqarah 2: 219), the meat of dead animals, blood and flesh of swine (Al-Quran Al-Baqarah 2: 173). In financial services, Islam forbids interest (Al-Quran Al-Baqarah 2: 276) and gambling (Al-Quran Al-Maidā 5: 90), for instance. On some occasions, even the lawful goods become impermissible, such as during the time of fasting (Al-Quran Al-Baqarah 2: 183). Fasting in Islam is prescribed for Muslims to make them become God-fearing by restraining their desires and achieving moral consciousness. Nevertheless, Islam does not approve monasticism (Al-Quran Al-Hadid 57: 27).

In Islamic jurisprudence, a hierarchy of needs is emphasized upon. Imam Al-Shatibi has categorized human needs into three groups; i) Dharuriyah (necessities), ii) Hajiyah (conveniences) and iii) Tahsiniyah (refinements). In the hierarchical structure of needs given by Al-Shatibi, necessities include such activities and things that are essential to protect i) Imaan (faith), ii) Nafs (life), iii) Maal (wealth), iv) Aqal (intellect) and v) Nasl (progeny). Thus, Islam recognizes physiological as well as aesthetic needs but requires moderation in consumption which is discussed in the next sub-section.

Moderation in Consumption

Instead of being miser and spendthrift, Islam wants Muslims to have moderation in their consumption, both with respect to contemporaneous consumption as well as intertemporal consumption. Allah in Al-Quran says: “And let not your hand be tied (like a miser) to your neck, nor stretch it forth to its utmost reach (like a spendthrift), so that you become blameworthy and in severe poverty” (Al-Quran Al-Isrā 17: 29). In another verse, Al-Quran says: “And those, who, when they spend, are neither extravagant nor niggardly, but hold a medium (way) between those (extremes).” (Al-Quran Al-Furqān 25: 67). In a Hadith, Prophet Muhammad (pbuh) said: “Spend according to your means; and do not hoard, for Allah will withhold from you.”[6] Islam expects Muslims to avoid being spendthrift and extravagant. Allah in Al-Quran says: “… Waste not by extravagance. Verily, He likes not those who waste” (Al-Quran Al-Anam 6: 141). In another verse, Allah in Al-Quran says: “…Spend not wastefully (your wealth) in the manner of a spendthrift.” (Al-Quran Al-Isrā 17: 26).

Avoiding Envy, Pride, Egoism and Boastfulness

Islamic principles recognize consumption externalities and counter them by explicitly cautioning against envy, egoism and pride. Instead of consuming positional goods and indulging in conspicuous consumption, Islam wants Muslims to observe humbleness and shun pride (Al-Quran Al-Isrā 17: 37; Luqman 31: 18). Al-Quran says that Allah does not like self-deluded and boasters (Al-Quran Al-Hadid 57: 23).

Islam also does not approve envious behaviour. Al-Quran says: “The desire for piling up of worldly things diverts you until you reach the graves.” (Al-Quran Al-Takāthur 102: 1-2). Instead, Al-Quran prescribes: “… Do not covet the bounties which God has bestowed more abundantly on some of you than others…” (Al-Quran Al-Nisā 4: 32).

Prophet Muhammad (pbuh) said: “Envy consumes good deeds just as fire consumes wood, and charity extinguishes bad deeds just as water extinguishes fire.”[7] Prophet Muhammad (pbuh) educated Muslims to be like none except the one who is given the knowledge of Al-Quran and the one who spends in charity.[8] Prophet Muhammad (pbuh) advised: “Look at the one who is at a lower level than you, and do not look at the one who is above you, for that may keep you from scorning the blessings of Allah.”[9]

Al-Quran educates Muslims that wealth will not last forever (Al-Humazah: 1-3). Wealth and children are only a trial (Al-Quran Al-Taghābun 64: 15). In one Hadith, Prophet Muhammad (pbuh) said: “Richness is not in having many possessions, but richness is to be content with oneself.”[10] The temporary nature of this worldly life and the material dispensation is eloquently summed up by Al-Quran as follows:

“Know that the life of this world is only play and amusement, pomp and mutual boasting among you, and rivalry in respect of wealth and children, as the likeness of vegetation after rain, thereof the growth is pleasing to the tiller; afterwards it dries up and you see it turning yellow; then it becomes straw…” (Al-Quran Al-Hadid 57: 20).

Encouragement Towards Pure Altruism

Islam does not recognize impure altruism to satisfy ego and to achieve fame and recognition (Al-Quran Al-Baqarah 2: 264; Al-Ma’un 107: 6). Prophet Muhammad (pbuh) advised anonymity and secrecy in charitable giving such that the right hand does not know what the left hand is giving[11]. Allah says of the ideal believers in Al-Quran: “And they give food, in spite of their love for it to Miskin (poor), the orphan, and the captive. (Saying): ‘We feed you seeking Allah’s countenance only. We wish for no reward, nor thanks from you’.” (Al-Quran Al-Insān 76: 8-9). Al-Quran urges believers to spend what they love in order to achieve righteousness (Al-Quran Al-‘Imrān 3: 92), spend throughout their lives (Al-Munafiqun 63: 10) and the ideal is to spend whatever is beyond their needs (Al-Quran Al-Baqarah 2: 219).

Al-Quran urges Muslims to show kindness, generosity and benevolence to their fellow human beings. Allah says in Al-Quran: “… Do good to parents, kinsfolk, orphans, Al-Masakin (the poor), the neighbour who is near of kin, the neighbour who is a stranger, the companion by your side and the wayfarer (you meet) …” (Al-Quran Al-Nisā 4: 36). Al-Quran says in another place: “So give to the kindred his due, and to Al-Miskin (the poor) and to the wayfarer…” (Al-Quran Ar-Rum 30: 38). Feeding orphans and poor is regarded as a highly virtuous act (Al-Quran Al-Balad 90: 12-16) in Al-Quran. Al-Quran exhorts Muslims to look after orphans and treat them with kindness and generosity (Al-Quran Al-Fajr 89: 17-20), work honestly on their property (Al-Quran Al-Baqarah 2: 220) and avoid oppressive treatment (Al-Quran Al-Dhuha 93: 9) as well as refrain from harsh behaviour (Al-Quran Al-Ma’un 107: 2). Al-Quran strictly prohibits usurping the endowments of orphans (Al-Quran Al-Nisā 4: 2).

Prophet Muhammad (pbuh) declared that the best charity is to spend (in charity) while you are healthy, aspiring, hoping to survive, and fearing poverty, and not delaying until death comes to you”[12]. Allah wants the believers to avoid miserliness (Al-Quran Al-Nisā 4: 37). Instead of enjoining miserliness, Islam urges Muslims to help one another in good acts and endeavours (Al-Quran Al-Maidā 5: 2).

Since Islam only accepts pure altruism, it promises numerous incentives for it in its two-worldly view of life. Several verses in Al-Quran promise due reward for pure altruism (Al-Quran Al-Tauba 9: 121; Fatir 35: 29; Al-Hadid 57: 7). In several other verses, spending in charitable ways for the sake of Allah is compared to a good loan which Allah will repay with a manifold increase (Al-Quran Al-Hadid 57: 11; Al-Hadid 57:18; Al-Taghābun 64: 17; Al-Muzammil 73: 20). In several Ahadith also, Muslims are encouraged to spend so that Allah also spends on them with His blessings.[13]

Leaving Familial and Philanthropic Bequests

Islam regards spending on one’s dependents as charity if done with the intention to please Allah.[14] Prophet Muhammad (pbuh) said that the greatest reward for what you spend is on your spending on the family.[15] Islamic principles are not averse to financial planning, precautionary savings and leaving enough wealth for the dependent family members. Prophet Muhammad (pbuh) said: “It is better for you to leave your inheritors wealthy than to leave them poor begging others…”[16] In another Hadith, Prophet Muhammad (pbuh) said: “As for one who is the guardian of an orphan who has wealth, then let him do business with it and not leave it until it becomes consumed by charity.”[17] On the other hand, Prophet Muhammad (pbuh) also allowed philanthropic bequests[18] but instructed that these bequests shall not exceed one-third of wealth.[19]


[1] Al-Bukhari, Book of Ar-riqaq, Vol 8, Hadith No. 6436.

[2] Al-Muslim, Book of Zakāt, Vol 3, Hadith No. 2410.

[3] Jamai-at-Tirmidhi, Chapters on Zakah, Vol 2, Hadith No. 680. Also, Sahih Al-Bukhari, Book of Zakah, Vol 2, Hadith No. 1470.

[4] Sunan Abu Daud, Book of Zakah, Vol 2, Hadith No. 1648.

[5] Jamai-at-Tirmidhi, Chapters on Zakāt, Vol 2, Hadith No. 653.

[6] Al-Muslim, Book of Zakah, Vol 3, Hadith No. 2378.

[7] Sunan Ibn-e-Maja, Chapters on Asceticism, Vol 5, Hadith No. 4210.

[8] Al-Bukhari, Book of Virtues of the Qur’an, Vol 6, Hadith No. 5025. Also in Al-Muslim, Book of Virtues, Vol 2, Hadith No. 1894.

[9] Al-Muslim, Book of Asceticism, Vol 7, Hadith No. 7430.

[10] Jamai-at-Tirmidhi, Chapters on Zuhd, Vol 4, Hadith No. 2373.

[11] Al-Muslim, Book of Zakāt, Vol 3, Hadith No. 2380.

[12] Sunan Abu Daud, Book of Wills, Vol 3, Hadith No. 2865. Also Sunan An Nisai, Book of Zakāt, Vol 3, Hadith No. 2543.

[13] Al-Bukhari, Book of Commentary, Vol 6, Hadith No. 4684. Also in Al-Muslim, Book of Zakah, Vol 3, Hadith No. 2308. Also in Sunan Ibn-e-Maja, Chapters on Expiation, Vol 3, Hadith No. 2123.

[14] Al-Muslim, Book of Zakah, Vol 3, Hadith No. 2322. Also in Al-Bukhari, Book of Al-Maghazi, Vol 5, Hadith No. 4006. Also in Jamai-at-Tirmidhi, Chapters on Righteousness, Vol 4, Hadith No. 1965.

[15] Al-Muslim, Book of Zakah, Vol 3, Hadith No. 2311. Also in Sunan Abu Daud, Book of Zakah, Vol 2, Hadith No. 1691.

[16] Al-Bukhari, Book of Al-Maghazi, Vol 5, Hadith No. 4409. Also in Al-Muslim, Book of Wills, Vol 4, Hadith No. 4215.

[17] Jamai-at-Tirmidhi, Chapters on Zakah, Vol 2, Hadith No. 641.

[18] Sunan Ibn-e-Maja, Chapters on Charity, Vol 3, Hadith No. 2396.

[19] Al-Bukhari, Book of Wills, Vol 4, Hadith No. 2742.

Questions, Feedback or Comments

Fill in your details below or click an icon to log in: Logo

You are commenting using your account. Log Out /  Change )

Facebook photo

You are commenting using your Facebook account. Log Out /  Change )

Connecting to %s

This site uses Akismet to reduce spam. Learn how your comment data is processed.