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Conflicting Measures of Poverty and Inadequate Saving by the Poor – The Role of Status Driven Utility Function

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Listed:
  • Marjit, Sugata
  • Roy, Ranjan

Abstract

In presence of inequality a status driven utility function reconciles the conflict between income based and nutrition based measures of poverty. Moreover, it can explain why the poor tend to save less, an established empirical fact in the developing countries. The result is independent of the assumption of imperfect capital market. The paper attempts to integrate various strands of literature on status effects.

Suggested Citation

  • Marjit, Sugata & Roy, Ranjan, 2010. "Conflicting Measures of Poverty and Inadequate Saving by the Poor – The Role of Status Driven Utility Function," MPRA Paper 27472, University Library of Munich, Germany.
  • Handle: RePEc:pra:mprapa:27472
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    File URL: https://mpra.ub.uni-muenchen.de/27472/1/MPRA_paper_27472.pdf
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    References listed on IDEAS

    as
    1. Fafchamps, Marcel & Shilpi, Forhad, 2008. "Subjective welfare, isolation, and relative consumption," Journal of Development Economics, Elsevier, vol. 86(1), pages 43-60, April.
    2. Ed Hopkins & Tatiana Kornienko, 2010. "Which Inequality? The Inequality of Endowments versus the Inequality of Rewards," American Economic Journal: Microeconomics, American Economic Association, vol. 2(3), pages 106-137, August.
    3. Omer Moav & Zvika Neeman, 2010. "Status and Poverty," Journal of the European Economic Association, MIT Press, vol. 8(2-3), pages 413-420, 04-05.
    4. Abhijit V. Banerjee & Esther Duflo, 2007. "The Economic Lives of the Poor," Journal of Economic Perspectives, American Economic Association, vol. 21(1), pages 141-168, Winter.
    5. Oded Galor & Joseph Zeira, 1993. "Income Distribution and Macroeconomics," Review of Economic Studies, Oxford University Press, vol. 60(1), pages 35-52.
    6. Cole, Harold L & Mailath, George J & Postlewaite, Andrew, 1992. "Social Norms, Savings Behavior, and Growth," Journal of Political Economy, University of Chicago Press, vol. 100(6), pages 1092-1125, December.
    7. Christian Ghiglino & Sanjeev Goyal, 2010. "Keeping Up with the Neighbors: Social Interaction in a Market Economy," Journal of the European Economic Association, MIT Press, vol. 8(1), pages 90-119, March.
    8. Corneo, Giacomo & Jeanne, Olivier, 1998. "Social organization, status, and savings behavior," Journal of Public Economics, Elsevier, vol. 70(1), pages 37-51, October.
    Full references (including those not matched with items on IDEAS)

    More about this item

    Keywords

    Inequality; Inter-temporal consumer choice; Utility; Poverty;

    JEL classification:

    • D11 - Microeconomics - - Household Behavior - - - Consumer Economics: Theory
    • D63 - Microeconomics - - Welfare Economics - - - Equity, Justice, Inequality, and Other Normative Criteria and Measurement
    • D91 - Microeconomics - - Micro-Based Behavioral Economics - - - Role and Effects of Psychological, Emotional, Social, and Cognitive Factors on Decision Making
    • I3 - Health, Education, and Welfare - - Welfare, Well-Being, and Poverty

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