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The Weight of Essentials in Economic Activity

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  • Baki Guney Isikara

    () (Department of Economics, New School for Social Research)

Abstract

This paper is interested in the weight of essential goods and services in economic activity. The first measure is concerned with the sphere of production, which makes use of World Input-Output Tables to construct net-product subsystems so as to estimate the total (direct and indirect) share of essentials in aggregate product. The second measure approaches the same question from the sphere of consumption by relying on OECD data on household final consumption expenditures. The results lie roughly in the interval of 45-70% and 50-75% in the spheres of production and consumption, respectively, where the lower and upper bounds are given by essentials in the narrow and broad sense, respectively. Interesting patterns are captured by comparing different groups of countries. Moreover, evidence is found for the aggregate-level counterpart of Engel’s Law. The results have important implications when read in the context of the literature on the welfare state, de(commodification), universal basic income, and the need to adjust consumption and production in response to the looming ecological crisis.

Suggested Citation

  • Baki Guney Isikara, 2018. "The Weight of Essentials in Economic Activity," Working Papers 1814, New School for Social Research, Department of Economics.
  • Handle: RePEc:new:wpaper:1814
    as

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    File URL: http://www.economicpolicyresearch.org/econ/2018/NSSR_WP_142018.pdf
    File Function: First version, 2018
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    References listed on IDEAS

    as
    1. Marcel P. Timmer & Erik Dietzenbacher & Bart Los & Robert Stehrer & Gaaitzen J. Vries, 2015. "An Illustrated User Guide to the World Input–Output Database: the Case of Global Automotive Production," Review of International Economics, Wiley Blackwell, vol. 23(3), pages 575-605, August.
    2. Robert C. Allen, 2017. "Absolute Poverty: When Necessity Displaces Desire," American Economic Review, American Economic Association, vol. 107(12), pages 3690-3721, December.
    3. Deepankar Basu & Duncan K. Foley, 2013. "Dynamics of output and employment in the US economy," Cambridge Journal of Economics, Oxford University Press, vol. 37(5), pages 1077-1106.
    4. Oskar Lange, 1937. "On the Economic Theory of Socialism: Part Two," Review of Economic Studies, Oxford University Press, vol. 4(2), pages 123-142.
    5. Robert C. Allen, 2017. "Absolute Poverty: When Necessity Displaces Desire REVISED," Working Papers 20170005, New York University Abu Dhabi, Department of Social Science, revised Jun 2017.
    Full references (including those not matched with items on IDEAS)

    More about this item

    Keywords

    Basic needs; essentials; subsystems; decommodification; planning;

    JEL classification:

    • B51 - Schools of Economic Thought and Methodology - - Current Heterodox Approaches - - - Socialist; Marxian; Sraffian

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