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The elusive quest for the subsistence line How much does the cost of survival vary between populations?

Mattias Lindgren ()

MPRA Paper from University Library of Munich, Germany

Abstract: The subsistence line, defined as the lowest possible income that can sustain a population, depends on several factors that vary between populations. For simplicity, however, the line is typically assigned a fixed dollar value, so that it represents subsistence under average conditions. We explore how much the line may differ across populations if we take relative prices, age composition, heights and climate into account. We estimate the cost of the physical minimum requirements, since this is the quantifiable part of the subsistence line. The variation of the physical minimum can shed light on the variation of the subsistence line, even though the latter is likely to be significantly higher than the physical minimum. Our physical minimum line, under baseline assumptions, is 0.67$ per day in 2005 international prices. Differences in prices between our cases imply physical minimum lines that vary between 50% and 150% of the baseline. The range of potential heights implies lines between 84% and 115% of the baseline and the range of age compositions implies lines between 97% and 110% of the baseline. The effect of climate is by assumption small, less than 5%. We cautiously suggest that relative prices is the first thing to take into account if we want to improve the subsistence line, whereas differences in the age composition is less of a concern.

Keywords: subsistence line; poverty; living standard; income estimate (search for similar items in EconPapers)
JEL-codes: D31 E01 I32 O10 O15 (search for similar items in EconPapers)
Date: 2015
New Economics Papers: this item is included in nep-dev
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