Family-Type Subsistence Incomes
Different family types may have a fixed flow of consumption costs, related to subsistence needs. We use a survey method in order to identify and estimate such a fixed component of spending for different families. Our method involves making direct questions about the linkup between aggregate disposable family income and well-being for different family types. Conducting our survey in six countries, Germany, France, Cyprus, China, India and Botswana, we provide evidence that fixed costs of consumption are embedded in welfare evaluations of respondents. More precisely, we find that the formalized relationship between welfare-retaining aggregate family incomes across different family types, suggested by Donaldson and Pendakur (2005) and termed “Generalized Absolute Equivalence Scale Exactness,” is prevalent and robust in our data. We use this relationship to identify subsistence needs of different family types and to calculate income inequality.
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- Donaldson, D. & Pendakur, K., 1999. "Equivalent-Income Functions and Income-Dependent Equivalence Scales," Discussion Papers dp99-8, Department of Economics, Simon Fraser University.
- Donaldson, David & Pendakur, Krishna, 2006. "The Identification of Fixed Costs From Consumer Behavior," Journal of Business & Economic Statistics, American Statistical Association, vol. 24, pages 255-265, July.
- Koulovatianos, Christos & Schroder, Carsten & Schmidt, Ulrich, 2005.
"On the income dependence of equivalence scales,"
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Elsevier, vol. 89(5-6), pages 967-996, June.
- Pitt, Mark M. & Rosenzweig, Mark R. & Hassan, Md. Nazmul, 1989.
"Productivity, Health and Inequality in the Intrahousehold Distribution of Food in Low-Income Countries,"
7480, University of Minnesota, Economic Development Center.
- Pitt, Mark M & Rosenzweig, Mark R & Hassan, Md Nazmul, 1990. "Productivity, Health, and Inequality in the Intrahousehold Distribution of Food in Low-Income Countries," American Economic Review, American Economic Association, vol. 80(5), pages 1139-56, December.
- Christos Koulovatianos & Carsten Schröder & Ulrich Schmidt, 2005.
"Properties of Equivalence Scales in Different Countries,"
Journal of Economics,
Springer, vol. 86(1), pages 19-27, October.
- Christos Koulovatianos & Carsten Schröder & Ulrich Schmidt, 2005. "Properties of Equivalence Scales in Different Countries," Vienna Economics Papers 0503, University of Vienna, Department of Economics.
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