A microeconomic analysis of subsistence

Mitra, Manipushpak and Sen, Debapriya (2021): A microeconomic analysis of subsistence. Forthcoming in: Indian Economic Review

Abstract

We present a microeconomic analysis of subsistence in the consumer theory framework with two goods: the basic good (food) and the non-basic good (non-food). Subsistence results in two regions in the consumption set: the pre subsistence zone in which the individual's subsistence requirement is not met and he exclusively cares about the basic good, and the post subsistence zone. This structure gives subsistence induced (SI) preferences. Compared to Stone-Geary utility functions, SI preferences give a better understanding of consumption decision problems for people who are on the margins of subsistence and can be useful to clarify related issues such as the use of child labor for poor households.

• Item Type: MPRA Paper
• Language: English
• Keywords: subsistence; pre subsistence zone; post subsistence zone; SI preferences
• Subjects: D - Microeconomics > D0 - General > D01 - Microeconomic Behavior: Underlying Principles; D - Microeconomics > D1 - Household Behavior and Family Economics > D11 - Consumer Economics: Theory; O - Economic Development, Innovation, Technological Change, and Growth > O1 - Economic Development > O12 - Microeconomic Analyses of Economic Development

References

Adhikari, A., Narayanan, R., Dhorajiwala, S., Mundoli, S. (2020) 21 days and counting: COVID-19 lockdown, migrant workers, and the inadequacy of welfare measures in India. Technical Report. Stranded Workers Action Network.

Basu, K., Van P.H. (1998) The economics of child labor. American Economic Review, 88(3), 412-427.

Bentham, J. (1843) Pannomial Fragments In: The Works of Jeremy Bentham, (J. Bowring, Ed.), Edinburgh: William Tait.

Cobbe, J.H. (1976) Reviewed works: Employment growth and basic needs. Journal of Modern African Studies 14(4), 713-715.

Dasgupta, P. (2004) World poverty: Causes and pathways. In: B. Pleskovic, B., Stern, N.H. (eds)., World Bank Conference on Development Economics, Washington, DC: World Bank.

Dasgupta, P., Ray, D. (1986) Inequality as a determinant of malnutrition and unemployment: Theory. Economic Journal, 96(384), 1011-1034.

de Haen, H., Klasen, S., Qaim, M. (2011) What do we really know? Metrics for food insecurity and undernutrition. Food Policy, 36(6), 760-769.

Deaton, A., Drèze, J. (2009) Food and nutrition in India: Facts and interpretations. Economic and Political Weekly, 44(7), 42-65.

Drèze, J. (2020) Averting hunger during monsoon calls for bold food security measures. The Indian Express, June 9, 2020. https://indianexpress.com/article/opinion/columns/nrega-funds-migrant-workers-monsoon-pds-scheme-6449293/

FAO (2014) The State of Food Insecurity in the World 2014, Questions and Answers. http://www.fao.org/publications/sofi/2014/2014faqs/en/

ILO (1976) Employment, growth and basic needs: a one-world problem. https://digitallibrary.un.org/record/82

ILO (2020) ILO Monitor: COVID-19 and the world of work. 2nd Edition. https://www.ilo.org/global/topics/coronavirus/impacts-and-responses/WCMS_740877/

Jensen, R.T., Miller, N.H. (2008) Giffen behavior and subsistence consumption. American Economic Review 98(4), 1553-1577.

Jolly, R., Santos, R. (2016) From development of the `other' to global governance for universal and sustainable development. IDS Bulletin, 47(2), 13-32

Kakwani, N. (1989) On measuring undernutrition. Oxford Economic Papers, 41(3), 528-552.

Laborde, D., Martin, W., Vos, R. (2020) Poverty and food insecurity could grow dramatically as COVID-19 spreads. IFPRI Research Post, April 16, 2020. https://www.ifpri.org/blog/poverty-and-food-insecurity-could-grow-dramatically-covid-19-spreads

Mander, H., Ghosh, J., Patnaik, P. (2020) A plan to revive a broken economy. The Hindu, May 14, 2020. https://www.thehindu.com/opinion/lead/a-plan-to-revive-a-broken-economy/article31577261.ece

Maslow, A.H. (1943) A theory of human motivation. Psychological Review, 50(4), 370-396.

Mitra, M., Sen, D. (2019) Subsistence, saturation and irrelevance in preferences. MPRA Paper No. 91582. https://mpra.ub.uni-muenchen.de/91582/

Naiken, L. (1998) On certain statistical issues arising from the use of energy requirements in estimating the prevalence of energy inadequacy (undernutrition). Journal of the Indian Society of Agricultural Statistics, 52(2\&3), 113-128.

Ravn, M.O., Schmitt-Groh\'{e, S., Uribe, M. (2008) Macroeconomics of subsistence points. Macroeconomic Dynamics, 12(Supplement 1), 136-147.

Rubinstein, A. (2012) Lecture Notes in Microeconomic Theory: The Economic Agent, Second Edition. Princeton University Press.

Rudin, W. (1976) Principles of Mathematical Analysis, McGraw-Hill Inc.

Sharif, M. (1986) The concept and measurement of subsistence: A survey of the literature. World Development 14(5), 555-577.

Sharif, M. (2003) A behavioral analysis of the subsistence standard of living. Cambridge Journal of Economics, 27(2), 191-207.

Srinivasan, T.N. (1981) Malnutrition: Some measurement and policy issues. Journal of Development Economics, 8(1), 3-19.

Steger, T.M. (2000) Economic growth with subsistence consumption. Journal of Development Economics 62(2), 343-361.

Stigler, G.J. (1945) The cost of subsistence. Journal of Farm Economics 27(2), 303-314.

Stigler, G.J. (1950) The development of utility theory II. Journal of Political Economy 58(5), 373-396.

Sukhatme, P.V. (1961) World's hunger and future needs in food supplies. Journal of the Royal Statistical Society, Series A (General), 124(4), 463-525.

Sukhatme, P.V. (1978) Assessment of adequacy of diets at different income levels. Economic and Political Weekly, 13(31/33), Special Number (August).

Svedberg, P. (2002) Undernutrition overestimated. Economic Development and Cultural Change, 51(1), 5-36.

United Nations (2021) Global Issues: Food. https://www.un.org/en/global-issues/food

Wanner, N., Cafiero, C., Troubat, N., Conforti, P. (2014) Refinements to the FAO methodology for estimating the prevalence of undernourishment indicator. ESS Working Paper No. 14-05, FAO.

Williams, M. (1872) A Sanskrit-English Dictionary, Oxford Clarendon Press. https://archive.org/details/1872sanskriten00moniuoft

World Bank (2022) Poverty and Shared Prosperity 2022. Overview booklet. World Bank, Washington, DC. https://www.worldbank.org/en/publication/poverty-and-shared-prosperity