|
on Heterodox Microeconomics |
|
Issue of 2024‒05‒20
eighteen papers chosen by Carlo D’Ippoliti, Università degli Studi di Roma “La Sapienza” |
| By: | Mark Setterfield (Department of Economics, New School For Social Research, USA); George Wheaton (Department of Economics, New School For Social Research, USA) |
| Abstract: | The Goodwin pattern – a counter-cyclical rotation in real activity × wage share space – is an established stylized fact of capitalist macrodynamics. Existing models typically assume profit-led real-sector dynamics, together with a ‘reserve army’ or profit squeeze mechanism, in order to reproduce this pattern. We extend an animal-spirits-driven business cycle model, in which the demand regime determining real-sector outcomes is wage-led, by adding a reserve army effect determining real wage dynamics. We construct an agent-based simulation of the model and show that we are able to reproduce the Goodwin pattern. Our results add to the literature suggesting that the Goodwin pattern can arise from a variety of different macrodynamic ensembles – including some that feature wage-led real sectors. |
| Keywords: | Goodwin pattern, animal spirits, wage-led demand, reserve army mechanism, profit squeeze, agent-based model, cyclical growth |
| JEL: | C63 E11 E12 E32 E37 |
| Date: | 2024–05 |
| URL: | http://d.repec.org/n?u=RePEc:new:wpaper:2407&r=hme |
| By: | Davis, John B.; ; (Department of Economics Marquette University; Department of Economics Marquette University) |
| Abstract: | Stratification economics (SE) investigates how economies are organized around group inequalities, especially by race and gender but also by ethnicity, national origin, religion, sexual orientation, etc. Its historical origins and theoretical foundations have both a structural strand that addresses how and a social behavioral strand. SE's structural strand goes back to Ricardo and Marx regarding the relationship between growth and distribution, and then draws on recent economic theory of noncompeting groups and dual economy models of labor market segmentation. SE's structural strand produces an inequality-based understanding of economics' standard goods taxonomy. The social behavioral strand builds on Du Bois's psychological wage concept, Veblen's social ladders theory of emulation, Blumer's theory of prejudice and stereotyping, and current social identity theory. SE's social behavioral strand makes it possible to explain how discrimination selectively stigmatizes people's social identities in order to reinforce existing intergroup inequalities. |
| Keywords: | stratification economics, intergroup inequality, caste, social groups, Ricardo, Marx, Lewis, Du Bois, Veblen, Blumer, social identity theory, goods taxonomy, stigmatization, intersectionality |
| JEL: | D31 D63 I31 J15 J16 Z13 |
| Date: | 2024–04 |
| URL: | http://d.repec.org/n?u=RePEc:mrq:wpaper:2024-02&r=hme |
| By: | Teresa Lackner; Luca E. Fierro; Patrick Mellacher |
| Abstract: | The paper introduces an integrated approach, blending Opinion Dynamics with a Macroeconomic Agent-Based Model (OD-MABM). It aims to explore the co-evolution of climate change mitigation policy and public support. The OD-MABM links a novel opinion dynamics model that is calibrated for European countries using panel survey data to the Dystopian Schumpeter meeting Keynes model (DSK). Opinion dynamics regarding stringent climate policy arise from complex interactions among social, political, economic and climate systems where a household's opinion is affected by individual economic conditions, perception of climate change, industry-led (mis-)information and social influence. We examine 133 policy pathways in the EU, integrating various carbon tax schemes and revenue recycling mechanisms. Our findings reveal that while effective carbon tax policies initially lead to a decline in public support due to substantial macroeconomic transition costs, they concurrently drive a positive social tipping point in the future. This shift stems from the evolving economic and political influence associated with the fossil fuel-based industry, gradually diminishing as the transition unfolds. Second, hybrid revenue recycling strategies that combine green subsidies with climate dividends successfully address this intertemporal tradeoff, broadening public support right from the introduction of the carbon tax. |
| Keywords: | Climate change, mitigation policy, opinion dynamics, agent-based models, transition risks |
| Date: | 2024–04–15 |
| URL: | http://d.repec.org/n?u=RePEc:ssa:lemwps:2024/11&r=hme |
| By: | Walke, Adam |
| Abstract: | Classical political economists developed several different explanations for what they saw as an inherent tendency for the rate of profit to decline over time. In the second quarter of the nineteenth century, some British advocates of colonization developed a corollary to those theories, suggesting that exporting capital to colonies could help arrest and reverse the decline. That argument was championed by the English political economist and promoter of colonization projects Edward Gibbon Wakefield, and it was systematized by John Stuart Mill. Ironically, the view that capital export and colonization played crucial roles in sustaining the rate of profit in advanced economies was later adopted by some Marxist theorists. Parallels between Karl Marx and J.S. Mill may help explain the remarkable theoretical continuity on this topic between nineteenth-century British advocates of colonization and early-twentieth-century Marxist critics of colonialism. |
| Date: | 2024–04–12 |
| URL: | http://d.repec.org/n?u=RePEc:osf:socarx:3v8wd&r=hme |
| By: | Ruben Tarne (University of Groningen); Dirk Bezemer (University of Groningen) |
| Abstract: | This paper is motivated by the global housing affordability crisis. Housing shortages in monetary economies are defined by affordability, which is the balance between money (income and borrowing) to access housing and the price (purchase prices and rents) that provides access. This balance is governed by real variables (demography and housing supply) and by monetary and financial variables (interest rates, mortgage debt subsidies, and loan-to-value norms). We study the trade-offs between policies addressing real and financial causes of affordability dynamics. We use a heterogeneous-agent housing market model calibrated to the Netherlands. We find that a 10% reduction in the peak house price level is achieved by reducing the bank's loan-to-value cap from 96.9% to 93.3%, or by increasing the interest rate from 4.0% to 5.4%, or by increasing the ratio of private properties to households from 69% to 74%. This corresponds to building 420, 000 housing units, an effort that faces substantial political, regulatory, and capacity constraints. Higher income inequality weakens the benefits of more construction for first-time buyers, as more of the housing stock is bought as a second home or by buy-to-let investors. |
| Date: | 2023 |
| URL: | http://d.repec.org/n?u=RePEc:imk:wpaper:222-2023&r=hme |
| By: | Eissler, Sarah; Rubin, Deborah; de Anda, Victoria |
| Abstract: | This study presents findings from a qualitative research study conducted in Chiapas, Mexico that is one component of a larger activity funded by the Walmart Foundation and implemented by the International Food Policy Research Institute (IFPRI), titled Applying New Evidence for Women’s Empowerment (ANEW). ANEW seeks to generate evidence from mixed-methods evaluations of women’s empowerment in production and other entrepreneurial efforts at different nodes of agricultural value chains and aims to develop and validate measures of women’s empowerment that focus on agricultural marketing and collective empowerment at the group level, both of which build upon the project-level Women’s Empowerment in Agriculture Index for Market Inclusion (pro-WEAI+MI). In this report, we present findings of a qualitative study of coffee cooperatives supported by Root Capital in Chiapas, Mexico and how Root Capital engages with them to advance women’s economic empowerment, among other objectives. As part of this study, we aimed to describe the gender dynamics and roles and responsibilities of men and women in the coffee value chain in Chiapas, and the opportunities and barriers faced as a result of these dynamics. This study employed qualitative methods to collect primary data from types of respondents using individual and group interviews. Two coffee cooperatives in Chiapas that work with Root Capital were selected to participate in this study. From June to July 2023, 21 individual interviews and 9 group interviews were conducted with market actors, men and women coffee cooperative leaders, men and women cooperative members and their wives, and Root Capital staff from two municipalities in Chiapas. The data were transcribed into Spanish and then translated into English. These transcripts were analyzed using thematic analysis in NVivo software. A codebook inclusive of inductive and deductive themes was developed to guide the thematic analysis. This study design adhered to best practices for ethical research and received approval from IFPRI’s IRB. Several limitations should be considered when reviewing the findings and conclusions of this study. There exist defined gender roles and divisions of labor at each node of the coffee value chain in Chiapas, and participants often described these roles as expected given social norms or perceived gender-specific limitations of natural abilities that would shape how men or women could engage in different activities. Men and women indicated that while men are in charge of coffee production activities, women do spend time contributing to cleaning and management activities, and that women are heavily involved in the coffee harvest. Both men and women explained that women are responsible for processing activities, which can be time consuming and laborious, but often occur close to the home. Although the coffee harvest activities require physical labor in picking and carrying the baskets of ripened cherries, there is a perception that women cannot participate in other post-harvesting activities, such as transporting bags of coffee, because the lifting is too physically heavy of a task for women. Men are responsible for managing the sale of coffee and directly negotiating with the buyer to the extent that a negotiation happens. In instances when buyers travel to the household as the point of sale, women can participate in sales, typically facilitating the sale under the direction of her husband. However, women still do not lift the coffee bags nor transport the bags for sale. And many coffee producing households prefer to or sometimes need to hire labor to help with coffee harvest activities; they tend to hire men as laborers more out of preference or their availability compared to women. Men and women interviewed for this study also described their perceptions and understanding of empowerment and elements of an empowered person with relation to engaging in the coffee value chain. Overall, while the concept of an empowered person was difficult for both men and women to relate to, they shared perceptions of how relations between men and women had changed over the years. Respecting women’s rights or the perception of respecting women’s rights was more acknowledged at the time of the interviews than in previous years, and it was more common to see men and women both generating incomes for the household. Men and women shared different perspectives regarding attitudes toward intimate partner violence, whereas both acknowledged men often mistreated their wives, but women discussed it as a private matter where men shared concerns over women’s reaction to the mistreatment rather than the mistreatment itself. Varying access to resources limited both men and women farmer’s ability to advance in the coffee value chain, particularly access to credit, which was limited for both men and women in the study areas. Limited access to credit with favorable or reasonable terms limited men’s and women’s ability to hire additional labor on their coffee farm or to purchase machines that would reduce specifically women’s time burdens within the household. Women’s time use is constrained by expectations and normative tasks in ways that men are not constrained. Future research is needed and discussed to better understand these dynamics of gendered roles and relations and elements of empowerment in the coffee value chain in Chiapas. Men and women members of the two respective cooperatives shared differences in how they were able to participate in and benefit from their participation in each cooperative. One cooperative provided more opportunities for members to directly engage in meetings, social activities, and capacity building opportunities whereas the other operated through a more decentralized structure and did not offer opportunities for members to directly participate in decision-making or meetings beyond the representation of their delegate. Members of both cooperatives perceived their cooperatives to be consistent and reliable coffee buyers offering stable prices. The former cooperative was also perceived as a source of support and community for members to advance their coffee production and post-harvesting activities. Both cooperatives also addressed key barriers faced by members, such as providing consistent and reliable pricing. Some members reported that cooperatives offered higher prices than those offered by non-cooperative buyers. Cooperatives also provided transportation options for producers to sell their coffee, which also enables women to have more engagement in coffee sales. However, normative barriers, such as women’s existing time burdens and their need for their husbands’ permission, limits women’s full participation in the cooperatives. Finally, we explored the extent to which Root Capital’s engagement with the cooperatives had supported activities or changes that strengthen women’s empowerment by understanding members and leaders’ perceptions of this engagement. Overall, cooperative members were generally unaware of Root Capital and its engagement with the cooperative. Since Root Capital does not provide direct services to farmers or cooperative members, it was not surprising that many cooperative members were generally unaware of Root Capital and its engagement with the cooperative. However, a few were aware of Root Capital, knowing it had provided their cooperative a loan to purchase and maintain a truck, which was used to reduce barriers faced by producers to bring their coffee to the point of sale and had implications for shifting gender roles to manage coffee sales. Cooperative leaders reflected on the loan that facilitated increased transportation capacity, as well as other benefits from working with Root Capital. However, as Root Capital operates with a client-driven approach, adoption of the Gender Equity Advisory services was limited as these services only became recently available in 2021 and cooperatives opted not to prioritize these until 2023. Therefore, there was limited data to understand how these activities may be influencing cooperative operations, gender dynamics and roles, and perception of women engaged in the coffee value chain at the time of this study. We present several recommendations for areas of future research and considerations for Root Capital to strengthen its approach to gender equity programming. |
| Keywords: | coffee; cooperatives; research methods; value chains; women’s empowerment; gender; collective behaviour; qualitative analysis; Americas; Northern America; Mexico |
| Date: | 2024 |
| URL: | http://d.repec.org/n?u=RePEc:fpr:ifprid:2248&r=hme |
| By: | Reddy, Niall |
| Abstract: | A large literature in heterodox political economy addresses an apparent puzzle in which investment has declined while profits have held up during the financialization era. The dominant answer to this puzzle centers on the rise of shareholder value orientation and the “downsizing and distributing” (DD) imperative it imposes on firms. Yet the detailed empirical literature on the topic - focussed on partial effects - pays precious little attention to actual observed patterns of growth, investment and distribution at a firm level. Digging deep into firm level data and correcting several conceptual and measurement errors, this paper challenges several key stylized facts of the financialization account, revealing a different set of patterns which are very difficult to square with stronger versions of DD theory. It shows that the profit-investment puzzle is not a paradox of the financialization era, but only of the post-2000 period. Similarly, the ramping up of payout rates only happens in a broad way after the turn of the millennium. While financialization theories cannot account for the 2000s watershed I argued that a trifecta of other structural shifts can. Ultimately this paper questions the widespread practice of giving analytical priority to financialization in heterodox political economy. |
| Date: | 2024–04–01 |
| URL: | http://d.repec.org/n?u=RePEc:osf:socarx:2zy5h&r=hme |
| By: | Tatsuru Kikuchi |
| Abstract: | Recently, a couple of investigations related to symmetry breaking phenomena, 'spontaneous stochasticity' and 'ergodicity breaking' have led to significant impacts in a variety of fields related to the stochastic processes such as economics and finance. We investigate on the origins and effects of those original symmetries in the action from the mathematical and the effective field theory points of view. It is naturally expected that whenever the system respects any symmetry, it would be spontaneously broken once the system falls into a vacuum state which minimizes an effective action of the dynamical system. |
| Date: | 2024–03 |
| URL: | http://d.repec.org/n?u=RePEc:arx:papers:2404.01333&r=hme |
| By: | Oschwald, Patrick; Jacob, Eva; Kamanzi, Adalbertus; Kaufmann, Gudrun |
| Abstract: | Societal structures play a crucial role when evaluating distributional outcomes. While social stratification may be more or less pronounced, most societies show some form of it. Being in a so-called "lower" social class often comes with economic uncertainty and is closely associated with a low household income (Western et al., 2012). The question is, if a redistribution scheme is chosen ex-ante via a social contract, or, redistributive measures are taken ex-post, how does the societal position play a role in this choice? As an outcome of the FRIBIS summer school 2023 on "Empirical methods of UBI investigations - Part II: The Social Contract: A Behavioral Economics Approach with Lab Experiments" we present here our extension for the experiment conducted by Faillo et al. (2015). The original experiment is based on contract theory in line with the tradition of Rawls A Theory of Justice (1971). Our extension, in a sense, lifts his proposed veil of ignorance and informs the disadvantaged of their societal position after a first round of the experiment. We begin with briefly describing the original experiment. Afterwards our proposed extension is described and contrasted against the outcomes of Faillo et al. (2015). We still have some reservations/doubts how far an approach with the "veil of ignorance" makes sense and what kind of (policy) implication could follow as logical outcome with respect to "terms of reality and power relations", which we will therefore discuss at the end. |
| Date: | 2024 |
| URL: | http://d.repec.org/n?u=RePEc:zbw:fribpd:290358&r=hme |
| By: | Espelt, Ricard |
| Abstract: | La agroecología fomenta un consumo de alimentos de proximidad, ecológicos y con un trato justo entre productor y consumidor. El movimiento —surgido en el marco de la soberanía alimentaria— actúa como respuesta al impacto social, económico y medioambiental causado por la industria alimentaria. En paralelo, la economía social y solidaria se está estableciendo —en su conjunto— como una alternativa al capitalismo imperante. Concebida desde la práctica, las iniciativas de la economía social y solidaria ponen en el centro de su actividad a las personas y no al capital. A pesar de que la agroecología y la economía social y solidaria comparten una perspectiva social, económica y medioambiental parecida, tienen todavía un reto importante en la construcción de un mercado social vinculado a la primera que le permita aumentar su escala de impacto. Esta alianza debe actuar como contrapartida a la propuesta de la industria alimentaria, centrada en la promoción del consumo de productos ecológicos y/o locales que, a pesar de atender a los distintos tipos de producción y/o a los productores locales, desatiende elementos básicos como el trato justo entre productor y consumidor. Este contexto se ve afectado por la actual expansión de la tecnología digital que está modificando los hábitos de consumo. Las grandes cadenas de supermercados, que concentran el mayor consumo de alimentos y otras iniciativas capitalistas, están aprovechando las plataformas digitales para seguir controlando la venta de alimentos. Por este motivo, la construcción de una alianza entre agroecología y economías sociales y solidarias debe contemplar el desarrollo de plataformas digitales cooperativas y basadas en los comunes digitales que permitan generar una alternativa al capitalismo de plataforma. Este capítulo se centra en el caso de Barcelona —capital mundial de la alimentación 2021—, una ciudad con una fuerte tradición de cooperativas de consumo agroecológico y un marco idóneo para el desarrollo de cooperativas de consumo agroecológico de plataforma. |
| Date: | 2024–04–06 |
| URL: | http://d.repec.org/n?u=RePEc:osf:socarx:w98rq&r=hme |
| By: | Golka, Philipp |
| Abstract: | Assets are central for the functioning of financial markets but have, to date, seen only little attention from scholars of financial infrastructures. This chapter seeks to address this shortcoming and argues that assets are important mediators between financial activity and financial infrastructures. To this end, this chapter draws on the notion of ‘boundary objects’ from science and technology studies to analyze the manifold interactions enabled by the asset form. To investigate the links between assets and financial infrastructures in more detail, this chapter distinguishes three stages in the lifecycle of assets. During assetization, emergent assets mediate between various professions as well as calculative infrastructures that enable their capitalization. During the second stage, asset management, assets mediate between various financial infrastructures and two crucial financial operations: trading, which introduces volatile asset prices, and layering, i.e. the production of new assets from existing assets. The third stage, deassetization, refers to the planned or unplanned dissolution or devaluation of assets and has so far received only little scholarly attention. Mapping and systematizing the manifold interconnections between assets and infrastructures that span across sociology, political economy and economic geography, this chapter also nurtures much-needed cross-disciplinary dialogue. |
| Date: | 2024–04–08 |
| URL: | http://d.repec.org/n?u=RePEc:osf:socarx:rbqm9&r=hme |
| By: | Ingar Haaland (NHH Norwegian School of Economics and FAIR); Christopher Roth (University of Cologne and ECONtribute, Max Planck Institute for Research on Collective Goods, CEPR); Stefanie Stantcheva (Harvard University, NBER, CEPR); Johannes Wohlfart (University of Cologne and ECONtribute, Max Planck Institute for Research on Collective Goods, CEBI, CESifo) |
| Abstract: | We survey the recent literature in economics measuring what is on top of people's minds using open-ended questions. We first provide an overview of studies in political economy, macroeconomics, finance, labor economics, and behavioral economics that have employed such measurement. We next describe different ways of measuring the considerations that are on top of people's minds. We also provide an overview of methods to annotate and analyze such data. Next, we discuss different types of applications, including the measurement of motives, mental models, narratives, attention, information transmission, and recall. Our review highlights the potential of using open-ended questions to gain a deeper understanding of mechanisms underlying observed choices and expectations. |
| Keywords: | Thoughts, Open-ended Questions, Text Data, Methodology, Surveys, Qualitative Research |
| JEL: | C90 D83 D91 |
| Date: | 2024–05 |
| URL: | http://d.repec.org/n?u=RePEc:ajk:ajkdps:298&r=hme |
| By: | Scheall, Scott |
| Abstract: | Ludwig von Mises’ methodological apriorism is often attributed to the broader Austrian School of economics. However, there is considerable controversy concerning the meaning of Mises’ justification of his apriorism. There are inconsistencies within and across Mises’ methodological writings that engender confusion in the secondary literature. This confusion is aggravated by the fact that Mises’ apriorism cannot be interpreted as an artifact of his historical milieu. The two prevailing families of interpretation both treat Mises’ apriorism as anachronistic, albeit in divergent senses. I conclude that the primary and secondary literatures on Mises’ apriorism indicate its inconsistency and incoherence. We have no idea what justification Mises intended when he asserted the a priori nature of the fundamental propositions of economics. If this is right, then, whatever method(s) they follow, Austrian economists cannot (deliberately) follow Mises’ apriorism, because no one knows well enough how Mises meant to justify it to follow it purposefully. |
| Date: | 2024–04–12 |
| URL: | http://d.repec.org/n?u=RePEc:osf:socarx:3aqcj&r=hme |
| By: | Polterovich, Victor |
| Abstract: | The article is devoted to the study of the history of the Soviet school of economics and mathematics, its struggle with the official ideology and attempts to influence the choice of strategies of socio-economic development. During the NEP period in the USSR a pleiad of brilliant economists worked, who possessed advanced statistical and economic-mathematical methods and obtained a number of fundamental results, which under favorable circumstances could become the basis for Russia's inclusion in the world flow of economic research. However, the leaders of the emerging scientific direction advocated a rational combination of the plan and the market, which contradicted the government's decision to curtail the NEP. The authorities demanded justification of their policy, they regarded independent research as hostile, and the school was crushed. Its revival began in the late 1950s after the exposure of the Stalin’s cult of personality, and took place in a fierce struggle with the Nachetnik Marxism. The paper shows that this struggle revealed the imperfection of the world mathematical economics of that time, which was focused on the study of market competition and did not consider the mechanisms of rationing, queues and black market characteristic of the planned economy. The intensive efforts made by Russian economists in this direction were belated. In the "war of programs" on the transition to the market that unfolded in the late 1990s, the concept of shock economy won. This result was facilitated by the pressure of international organizations, which did not care about the welfare of the USSR population, and the lack of unity among Russian economists. They united with each other and with leading Western economists belatedly, so that the program of reforms put forward by them could no longer influence the results of reforms. Nevertheless, the efforts of mathematical economists contributed to the formation of modern economic education and independent economic science in Russia. |
| Keywords: | Soviet mathematical economists, planned economy, ideology, rationing, queues, black market, reform programs, shock therapy, economic education |
| JEL: | A11 B23 B24 N01 O21 P21 |
| Date: | 2024–04–22 |
| URL: | http://d.repec.org/n?u=RePEc:pra:mprapa:120794&r=hme |
| By: | Humphries, Jane |
| Abstract: | Economists ignore caring labor since most is provided unpaid. Disregard is unjust, theoretically indefensible, and probably misleading. Valuation requires estimates of time spent and the replacement or opportunity costs of that time. I use the maintenance costs of British workers, costs which cover both the material inputs into upkeep and the domestic services needed to turn commodities into livings, to isolate the costs of paid domestic labor. I then impute the value of unpaid domestic labor from these market equivalents, and aggregate across households without domestic servants. Historically, unpaid domestic labor represented c. 20 percent of total income, a contribution that suggests the need to revise some standard narratives. |
| JEL: | R14 J01 N0 |
| Date: | 2024–04–05 |
| URL: | http://d.repec.org/n?u=RePEc:ehl:lserod:122725&r=hme |
| By: | Savvakis C. Savvides (Visiting Lecturer, John Deutsch International Executive Programs, Queen’s University, Canada) |
| Abstract: | The paper highlights the importance of good wealth distribution among the economic agents of a country so that the benefits of a free-market economy to work efficiently and create new wealth that fosters economic welfare are at work. Extreme inequality and a dysfunctional banking system deprives the market economy from entrepreneurial skills and innovation competencies. In addition, the risk aversion attitudes of the wealthy lead to an elusive pursuit of return without the risk, but which inevitably, through a failing banking system, results to transferring existing rather than creating new wealth and thereby further exaggerating wealth concentration and inequality. |
| Keywords: | Economic development, risk analysis, project evaluation, corporate lending, credit risk. |
| JEL: | D61 G17 G21 G32 G33 H43 |
| Date: | 2024–04–23 |
| URL: | http://d.repec.org/n?u=RePEc:qed:dpaper:4618&r=hme |
| By: | Jan Behringer (Macroeconomic Policy Institute (IMK)); Lukas Endres (Macroeconomic Policy Institute (IMK)); Till van Treeck (University of Duisburg-Essen) |
| Abstract: | We analyse the decline of household saving rates in the bottom half of the income distribution in Germany since the 2000s, which allowed for only moderately increasing consumption inequality, despite sharply rising income inequality. We combine survey data on household consumption with our own representative survey on the visibility and status relevance of various spending categories to test for upwards directed social status comparisons as an explanation of these trends. We find that non-rich households shift their income allocations towards more visible and status relevant areas of consumption when incomes at the top rise relative to their own. Renter households offset higher status consumption by reducing expenditures on other consumption components. In contrast, homeowners maintain higher status-oriented expenditures, particularly regarding housing, by considerably reducing their saving rates. |
| Keywords: | Personal Income Distribution, Status Concerns, Household Consumption, Homeownership |
| JEL: | D1 D31 E21 R21 |
| Date: | 2023 |
| URL: | http://d.repec.org/n?u=RePEc:imk:wpaper:219-2023&r=hme |
| By: | Verónica Amarante (Universidad de la República (Uruguay). Facultad de Ciencias Económicas y de Administración. Instituto de Economía); Maira Colacce (Universidad de la República (Uruguay). Facultad de Ciencias Económicas y de Administración. Instituto de Economía); Federico Scalese (Universidad de la República (Uruguay). Facultad de Ciencias Económicas y de Administración. Instituto de Economía) |
| Abstract: | Income-based objective welfare indicators may fail to account for important socio-economic factors that could affect the level of a household’s well- being. This has led to the development of subjective measures of well-being, based on respondent’s self-assessments of welfare questions. In this article, we derive subjective poverty lines for seven Latin American countries (Brazil, Colombia, Ecuador, El Salvador, Paraguay, Peru and Uruguay) based on a Minimum Income Question included in household expenditure surveys. We compare poverty incidence under the subjective and objective approach and find that subjective poverty is larger than objective poverty for all countries. People that are identified as poor are generaly poor by both measures or only subjective poor, although the patterns of overlapping differ between countries. Thus, being income poor does not comletely coincide with feeling poor. We explore the factors associated to considering oneself as poor -that is, being subjectively poor- when the per capita household income is higher than the absolute poverty line. In general terms, unemployment and informality are associated with higher probability of subjective poverty. Other factors not directly involving income but reflecting high economic security, such as having health insurance, home ownership, the quality of housing and an asset index, also tend to reduce the probability of feeling poor. Finally, the welfare stigma effect seems not hold, at least in terms of subjective poverty. |
| Keywords: | poverty lines, subjective poverty, Latin America |
| JEL: | I32 O10 |
| Date: | 2024–02 |
| URL: | http://d.repec.org/n?u=RePEc:ulr:wpaper:dt-01-24&r=hme |