Status, Poverty and Trade

Marjit, Sugata and Roychowdhury, Punarjit (2011): Status, Poverty and Trade.

Abstract

The conflict between the income based and nutrition based estimates of poverty is a widely debated issue in economic literature. This paper, using a two commodity framework, attempts to show that in presence of inequality, a status driven utility function can reconcile the conflict between the two measures of poverty. In addition, a simple general equilibrium model using such a utility function is constructed to analyse the implications of social inequality on relative prices and the emerging pattern of trade.

• Item Type: MPRA Paper
• Language: English
• Keywords: Inequality, Nutrition good, Poverty, Status good, Trade, Utility
• Subjects: D - Microeconomics > D5 - General Equilibrium and Disequilibrium > D50 - General; D - Microeconomics > D1 - Household Behavior and Family Economics > D11 - Consumer Economics: Theory; D - Microeconomics > D6 - Welfare Economics > D63 - Equity, Justice, Inequality, and Other Normative Criteria and Measurement; I - Health, Education, and Welfare > I3 - Welfare, Well-Being, and Poverty > I32 - Measurement and Analysis of Poverty; O - Economic Development, Innovation, Technological Change, and Growth > O1 - Economic Development > O12 - Microeconomic Analyses of Economic Development

References

Banerjee, A. and Duflo, E. (2007), “The Economic Lives of the Poor”, Journal of Economic Perspectives, 21(1), pp. 141-168.

Beath, J. A. and Fitzroy, F. R. (2007), “Status, Happiness and Relative Income”, IZA Discussion Paper No. 2658.

Clark, A. E., Frijters, P. and Shields, M. A. (2008), “Relative Income, Happiness and Utility: An Explanation for the Easterlin Paradox and Other Puzzles”, Journal of Economic Literature, 46(1), pp. 95-144.

Deaton, A. and Drèze, J. (2009), “Food and Nutrition in India: Facts and Interpretations,” Economic and Political Weekly, 44(7), pp. 42-65.

Fafchamps, M. and Shilpi, F. (2008), “Subjective welfare, isolation, and relative consumption,” Journal of Development Economics, 86(1), pp. 43-60.

Ghiglino, C and Goyal, S. (2010), “Keeping up with the Neighbors: Social Interaction in a Market Economy”, Journal of the European Economic Association, 8(1), pp. 90-119.

Moav, O. and Neeman, Z. (2010), “Status and Poverty”, Journal of the European Economic Association, 8(2-3), pp. 413-420.

Mujcic, R. and Frijters, P. (2010), “Economic Choices and Status: Measuring Preferences for Income Rank”, IZA Discussion Paper No. 5157.

Patnaik, U. (2007), “Neoliberalism and Rural Poverty in India”, Economic and Political Weekly, 42 (30), pp. 3132-3150.

Sivanathan, N. and Pettit, N. C. (2010), “Protecting the self through consumption: Status goods as affirmational commodities”, Journal of Experimental Social Psychology, 46(3), pp. 564-570.

Veblen, T. (1899), The Theory of Leisure Class, NY: Macmillan