A Behavioral Analysis of the Subsistence Standard of Living
Author(s)
Sharif, Mohammed
Abstract
Subsistence is analyzed as an endogenous variable, contrary to its conventional exogenous treatment. It is postulated that the subsistence-livers perceive their own standard of subsistence, direct their earnings behavior towards attaining, maintaining or exceeding this standard and, thus, reveal the standard through this behavior. The labor supply function of the working poor, which displays a forward-falling segment at low wages and an upward-rising segment at higher wages, is hypothesized to offer measures of subsistence and survival standards. The concepts are rationalized using Sen’s concept of ‘freedom of choice’ and Arrow’s concept of ‘freedom as flexibility’. It is argued that at below-subsistence living, individuals lack freedom of flexibility in choosing their preferences and thus suffer the loss of freedom of choice-while subsistence offers a reasonable minimum of this freedom, the freedom is completely lost at the lowest survival standard.
