543. Relative Social Status and Conflicting Measures of Poverty - A Behavioral Analytical Model

Sugata Marjit, Sattwik Santra, Koushik Kumar Hati, School of Economics Discussion Paper No. 543 April 2015, Centre for Studies in Social Sciences, Calcutta.

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Abstract

We consider a situation where the relatively ‘poor’ are concerned about their relative income status with respect to a relevant reference group. Such a concern is explicitly introduced in a utility function to study the consumption behavior of the poor. We point towards a possible conflict between income based and nutrition- based measure of poverty. Changes in income distribution generate non-homothetic outcome for an “otherwise homothetic” preference structure and may convert an “otherwise normal” good into an inferior good.