It depends on what type of sensors you want to use. An emulator is only an Android OS, but it uses your computer processor, so the results you get with your computer processor will be much more powerful than an Android device.
If you want to monetize your application, it is advisable that you use an Android device to test your application, since you do not want you to feel bad?
Another point. If you create an application that uses web services, you will get really different results depending on the time to get a response from the server. Since the emulator uses your fast broadband Internet, and your user can use their Internet access on a 3G network, this will be of great importance.
Conclusion: Depends on the type of application you have. It is preferable to test the device if your application includes the Internet and many sensors.
Just found a very good discussion of professionals, this can help expand your understanding ...
Android emulator vs real device
Happy coding!
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