In the agriculture puzzle, it's pretty clear from statistical studies that the income elasticity of demand for agricultural products (mostly unprocessed food) is less than one. In other words, the demand for agricultural products is income-inelastic, and that means that the demand for agricultural goods increases less than in proportion to the overall increase in income. If follows that, when overall income is increasing, agriculture's share would be decreasing, even if nothing else changed.
For example, suppose that we start with a national income of 100 billion, and farm production is 10 billion, a 10% share. Income increases by 10% to 110 billion, and farm demand and production increase by 2.5% to 10.25 billion. That reduces the farm share to 9.3%.
This means that, even without the increasing efficiency of farming and the dropping prices, farm incomes would have been less in proportion to total incomes. When we add the two facts together, we get a powerful explanation for the decline of the farm industry.
Income elasticity is also a complication for public transportation. It is clear that the demand for public transportation is income inelastic -- and in fact, it seems likely that public transportation is an inferior good. I haven't seen clear evidence one way or another on that, but it seems that as people get better off, they shift from the busses and the subways to their private cars, and if enough of them do it it could make for a negative income elasticity of demand -- an inferior good.
That would help to explain the recurring crises in public transportation. As the community as a whole gets better off, demand for most public transportation services drops. (There probably are a few exceptions). To cover the costs of providing public transportation, it's necessary to raise revenue -- and because of the inelastic demand (with respect to price), the only way to do that is to raise the fare, further cutting use of the service.
As we can see, income elasticity of demand, like price elasticity, is an important tool for understanding economic events.
