A microeconomic analysis of subsistence

Article Type

Research Article

Publication Title

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.

First Page

301

Last Page

320

DOI

10.1007/s41775-022-00153-w

Publication Date

12-1-2022

Comments

Open Access, Green

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