Family-Type Subsistence Incomes

35 Pages Posted: 29 May 2007

See all articles by Christos Koulovatianos

Christos Koulovatianos

Department of Finance, University of Luxembourg

Carsten Schröder

Free University of Berlin (FUB) - Department of Business and Economics

Ulrich Schmidt

University of Kiel - Institute of Economics

Date Written: July 6, 2007

Abstract

Different family types may have a fixed flow of consumption costs related to subsistence needs. We use a survey approach in order to identify and estimate such a fixed component of spending for different families. Our method involves making direct questions about the linkup between aggregate disposable family income and well-being for different family types. Conducting a pilot version of our survey in six countries, Germany, France, Cyprus, China, India and Botswana, we provide evidence that fixed costs of consumption are embedded in welfare evaluations of respondents. More precisely, we find that the relationship between welfare-retaining aggregate family incomes across different family types suggested by Donaldson and Pendakur (2006) and termed Generalized Absolute Equivalence Scale Exactness is prevalent and robust in our data. We use this relationship to identify subsistence needs of different family types and discuss potential problems and extensions.

Keywords: subsistence, equivalence scales, survey method, generalized absolute equivalence scale exactness

JEL Classification: I31, I32, C42, D31, D12, D63

Suggested Citation

Koulovatianos, Christos and Schröder, Carsten and Schmidt, Ulrich, Family-Type Subsistence Incomes (July 6, 2007). Available at SSRN: https://ssrn.com/abstract=989167 or http://dx.doi.org/10.2139/ssrn.989167

Christos Koulovatianos (Contact Author)

Department of Finance, University of Luxembourg ( email )

4 Rue Albert Borschette
Luxembourg, L-1246
Luxembourg

Carsten Schröder

Free University of Berlin (FUB) - Department of Business and Economics ( email )

Boltzmannstrasse 20
D-14195 Berlin, 14195
Germany
+49 030 838-52259 (Phone)
+49 030 838-52560 (Fax)

Ulrich Schmidt

University of Kiel - Institute of Economics ( email )

Olshausenstrasse 40
24098 Kiel, 24098
Germany

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