The Asymmetric Impact of Income Inequality on the Relative Consumption of Market and Non-Market Goods

18 Pages Posted: 8 Dec 2012

Date Written: December 6, 2012

Abstract

Increasing income inequality has an asymmetric impact on society. Affluent households consume both more market and non-market goods. Middle-class households however, in order to minimize utility loss, must substitute away non-market goods in an effort to maintain proportional consumption of market goods. Utilizing standard Cobb-Douglas utility functions this paper models the resulting asymmetric impact on affluent and non-affluent households. Census data is then used to test these conceptual results within the context of urban sprawl.

Keywords: Income Inequality, Consumerism, Sprawl

JEL Classification: D10, D63, R10

Suggested Citation

Hinson, Steven, The Asymmetric Impact of Income Inequality on the Relative Consumption of Market and Non-Market Goods (December 6, 2012). Available at SSRN: https://ssrn.com/abstract=2186207 or http://dx.doi.org/10.2139/ssrn.2186207

Steven Hinson (Contact Author)

Webster University ( email )

470 E. Lockwood Ave.
St. Louis, MO 63119
United States

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