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Subsistence induced and complementarity induced irrelevance in preferences

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  • Mitra, Manipushpak
  • Sen, Debapriya

Abstract

In a two-good setting we axiomatize (a) preferences with subsistence consumption and (b) a generalized version of Leontief preferences. Our axiomatization allows for different levels of subsistence and captures the presence of poverty and prosperity. Our axioms are based on the irrelevance of one of the goods at certain consumption bundles. For subsistence, the irrelevance is induced by the subsistence requirement and for generalized Leontief, it is induced by complementarity. We capture this difference using the notion of unhappy sets.

Suggested Citation

  • Mitra, Manipushpak & Sen, Debapriya, 2014. "Subsistence induced and complementarity induced irrelevance in preferences," MPRA Paper 59474, University Library of Munich, Germany.
  • Handle: RePEc:pra:mprapa:59474
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    References listed on IDEAS

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    1. Peter C. Fishburn, 1975. "Axioms for Lexicographic Preferences," Review of Economic Studies, Oxford University Press, vol. 42(3), pages 415-419.
    2. Sharif, Mohammed, 1986. "The Concept and measurement of subsistence: A survey of the literature," World Development, Elsevier, vol. 14(5), pages 555-577, May.
    3. Steger, Thomas M., 2000. "Economic growth with subsistence consumption," Journal of Development Economics, Elsevier, vol. 62(2), pages 343-361, August.
    4. Ariel Rubinstein, 2006. "Lecture Notes in Microeconomic Theory," Online economics textbooks, SUNY-Oswego, Department of Economics, number gradmicro1.
    5. Segal, Uzi & Sobel, Joel, 2002. "Min, Max, and Sum," Journal of Economic Theory, Elsevier, vol. 106(1), pages 126-150, September.
    6. Robert T. Jensen & Nolan H. Miller, 2008. "Giffen Behavior and Subsistence Consumption," American Economic Review, American Economic Association, vol. 98(4), pages 1553-1577, September.
    7. Svedberg, Peter, 2000. "Poverty and Undernutrition: Theory, Measurement, and Policy," OUP Catalogue, Oxford University Press, number 9780198292685.
    Full references (including those not matched with items on IDEAS)

    More about this item

    Keywords

    Subsistence; irrelevance; unhappy sets; generalized Leontief;

    JEL classification:

    • D11 - Microeconomics - - Household Behavior - - - Consumer Economics: Theory
    • O12 - Economic Development, Innovation, Technological Change, and Growth - - Economic Development - - - Microeconomic Analyses of Economic Development

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