Hierarchy of Needs and the Measurement of Poverty and Standards of Living

The choice of durable goods and assets is hierarchical, with an order of acquisition based on real incomes. Two main approaches, Paroush and Item Response Theory, are presented, and an empirical illustration is based on the 2019 Eurobarometer Survey. Measures of inequality, poverty, and welfare can be derived from this order, and an order of curtailment of expenditures when individuals face financial difficulties is also shown.

Format: Paperback / softback
Length: 102 pages
Publication date: 22 February 2024
Publisher: Cambridge University Press

The concept of hierarchy in choice is central to this Element, suggesting that as real incomes increase, there is a systematic order in the acquisition of durable goods and assets. Two primary approaches are presented to establish this order: the Paroush approach and Item Response Theory. To illustrate this concept, an empirical example is provided based on the 2019 Eurobarometer Survey.

The Element concludes with two sections. The first section demonstrates how measures of inequality, poverty, and welfare can be derived from this acquisition order. The second section highlights the existence of an order of expenditure reduction when individuals encounter financial difficulties.

This title is also available as Open Access on Cambridge Core.

Weight: 161g
ISBN-13: 9781009358170