EconPapers    
Economics at your fingertips  
 

Incorporating Minimum Subsistence Consumption into International Comparisons of Real Income

Robert Ackland ()

The Review of Economics and Statistics, 2008, vol. 90, issue 4, 702-712

Abstract: Cross-country demand data are often consistent with the existence of a representative consumer with homothetic preferences. While homotheticity allows the construction of tight bounds to quantity indexes and their variance, it contradicts the biological reality that humans require minimum consumption of food, clothing, and shelter. This paper presents an approach for nonparametrically estimating bounds to utility from above-subsistence consumption. OECD data are used to show that homotheticity markedly compresses the real income distribution relative to what is found under the more general class of affine-homothetic preferences, and this has major consequences for estimates of convergence. Copyright by the President and Fellows of Harvard College and the Massachusetts Institute of Technology.

Date: 2008
References: Add references at CitEc
Citations: Track citations by RSS feed

Downloads: (external link)
http://www.mitpressjournals.org/doi/pdf/10.1162/rest.90.4.702 link to full text (application/pdf)
Access to full text is restricted to subscribers.

Related works:
This item may be available elsewhere in EconPapers: Search for items with the same title.

Export reference: BibTeX RIS (EndNote, ProCite, RefMan) HTML/Text

Persistent link: https://EconPapers.repec.org/RePEc:tpr:restat:v:90:y:2008:i:4:p:702-712

Ordering information: This journal article can be ordered from
https://mitpressjour ... rnal/?issn=0034-6535

Access Statistics for this article

The Review of Economics and Statistics is currently edited by Amitabh Chandra, Olivier Coibion, Bryan S. Graham, Shachar Kariv, Amit K. Khandelwal, Asim Ijaz Khwaja, Brigitte C. Madrian and Rohini Pande

More articles in The Review of Economics and Statistics from MIT Press
Bibliographic data for series maintained by Ann Olson ().

 
Page updated 2020-06-14
Handle: RePEc:tpr:restat:v:90:y:2008:i:4:p:702-712