Does inequality affect the consumption patterns of the poor? â€“ The role of status seeking behaviour
We consider a situation where the relatively â€˜poorâ€™ are concerned about their relative income status with respect to a relevant reference group. Such a concern is explicitly introduced in a utility function to study the consumption and saving behavior of the poor in terms of a static and dynamic model. The static model points toward a possible conflict between income based and nutrition-based measure of poverty. The dynamic model exhibits the possibility of a higher rate of accumulation coupled with an inadequate nutritional intake, relative to a situation where there is no such concern for status. Thus, growth with malnutrition may also imply a conflict between different measures of poverty. Both the models point toward a direct and negative relationship between inequality and share of nutritional consumption as reflected in the consumption of food. Finally the paper looks at the empirical relationship between inequality and consumption across districts within states of India. The hypotheses that inequality impacts consumption patterns via status effect cannot be rejected. In fact the impact seems to be significant across a number of the Indian states.
|Date of creation:||15 Jan 2014|
|Contact details of provider:|| Postal: St. Lucia, Qld. 4072|
Phone: +61 7 3365 6570
Fax: +61 7 3365 7299
Web page: http://www.uq.edu.au/economics/
More information through EDIRC
Please report citation or reference errors to , or , if you are the registered author of the cited work, log in to your RePEc Author Service profile, click on "citations" and make appropriate adjustments.:
- Fafchamps, Marcel & Shilpi, Forhad, 2008.
"Subjective welfare, isolation, and relative consumption,"
Journal of Development Economics,
Elsevier, vol. 86(1), pages 43-60, April.
- Fafchamps, Marcel & Shilpi, Forhad, 2006. "Subjective Welfare, Isolation and Relative Consumption," CEPR Discussion Papers 6002, C.E.P.R. Discussion Papers.
- Easterlin, Richard A, 2001. "Income and Happiness: Towards an Unified Theory," Economic Journal, Royal Economic Society, vol. 111(473), pages 465-484, July.
- 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.
- Ed Hopkins & Tatiana Kornienko, 2008. "Which Inequality? The Inequality of Endowments Versus the Inequality of Rewards," ESE Discussion Papers 185, Edinburgh School of Economics, University of Edinburgh.
- Hopkins, Ed & Kornienko, Tatiana, 2008. "Which Inequality? The Inequality of Endowments Versus the Inequality of Rewards," SIRE Discussion Papers 2008-13, Scottish Institute for Research in Economics (SIRE).
- Robinson, Peter M, 1988. "Root- N-Consistent Semiparametric Regression," Econometrica, Econometric Society, vol. 56(4), pages 931-954, July.
- Frank, Robert H, 1985. "The Demand for Unobservable and Other Nonpositional Goods," American Economic Review, American Economic Association, vol. 75(1), pages 101-116, March.
- Omer Moav and & Zvika Neeman, 2012. "Saving Rates and Poverty: The Role of Conspicuous Consumption and Human Capital," Economic Journal, Royal Economic Society, vol. 122(563), pages 933-956, 09.
- Clark, Andrew E. & Oswald, Andrew J., 1996. "Satisfaction and comparison income," Journal of Public Economics, Elsevier, vol. 61(3), pages 359-381, September.
- Clark, Andrew E & Oswald, Andrew J, 1993. "Satisfaction and Comparison Income," Economics Discussion Papers 10018, University of Essex, Department of Economics.
- Clark, Andrew E. & Oswald, Andrew J., 1994. "Satisfaction and comparison income," CEPREMAP Working Papers (Couverture Orange) 9408, CEPREMAP.
- McBride, Michael, 2001. "Relative-income effects on subjective well-being in the cross-section," Journal of Economic Behavior & Organization, Elsevier, vol. 45(3), pages 251-278, July.
- repec:esx:essedp:655 is not listed on IDEAS
- Robson, Arthur J, 1992. "Status, the Distribution of Wealth, Private and Social Attitudes to Risk," Econometrica, Econometric Society, vol. 60(4), pages 837-857, July.
- Erzo F. P. Luttmer, 2005. "Neighbors as Negatives: Relative Earnings and Well-Being," The Quarterly Journal of Economics, Oxford University Press, vol. 120(3), pages 963-1002.
- Luttmer, Erzo F. P., 2004. "Neighbors as Negatives: Relative Earnings and Well-Being," Working Paper Series rwp04-029, Harvard University, John F. Kennedy School of Government.
- Erzo F.P. Luttmer, 2004. "Neighbors as Negatives: Relative Earnings and Well-Being," NBER Working Papers 10667, National Bureau of Economic Research, Inc.
- Rasmus Heltberg, 2009. "Malnutrition, poverty, and economic growth," Health Economics, John Wiley & Sons, Ltd., vol. 18(S1), pages 77-88, April.
- Easterlin, Richard A., 1995. "Will raising the incomes of all increase the happiness of all?," Journal of Economic Behavior & Organization, Elsevier, vol. 27(1), pages 35-47, June.
- Redzo Mujcic & Paul Frijters, 2013. "Economic choices and status: measuring preferences for income rank," Oxford Economic Papers, Oxford University Press, vol. 65(1), pages 47-73, January.
- Mujcic, Redzo & Frijters, Paul, 2010. "Economic Choices and Status: Measuring Preferences for Income Rank," IZA Discussion Papers 5157, Institute for the Study of Labor (IZA).
- 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.
- Marjit, Sugata & Roychowdhury, Punarjit, 2012. "Inequality, status effects and trade," MPRA Paper 40225, University Library of Munich, Germany.
- Ferrer-i-Carbonell, Ada, 2005. "Income and well-being: an empirical analysis of the comparison income effect," Journal of Public Economics, Elsevier, vol. 89(5-6), pages 997-1019, June. Full references (including those not matched with items on IDEAS)
When requesting a correction, please mention this item's handle: RePEc:qld:uq2004:514. See general information about how to correct material in RePEc.
For technical questions regarding this item, or to correct its authors, title, abstract, bibliographic or download information, contact: (SOE IT)
If you have authored this item and are not yet registered with RePEc, we encourage you to do it here. This allows to link your profile to this item. It also allows you to accept potential citations to this item that we are uncertain about.
If references are entirely missing, you can add them using this form.
If the full references list an item that is present in RePEc, but the system did not link to it, you can help with this form.
If you know of missing items citing this one, you can help us creating those links by adding the relevant references in the same way as above, for each refering item. If you are a registered author of this item, you may also want to check the "citations" tab in your profile, as there may be some citations waiting for confirmation.
Please note that corrections may take a couple of weeks to filter through the various RePEc services.