An economic analysis of demand of the very poor

Sanghak Lee, Suman Ann Thomas, Greg M. Allenby

Research output: Contribution to journalArticle

Abstract

Economic studies of consumer behavior focus almost exclusively on people in developed countries with relatively large household budgets as compared to others in the world. The very poor, those surviving on less than $2.50 per day, make up half the world's population and are not represented in academic studies of brand preference and choice. Those characterized as extremely poor, living on less than $1.25 per day, are estimated to comprise 1.3 billion people, with nearly half living in India and China1. In this paper we investigate demand for the very poor using economic models of choice that have been applied to studies of the American consumer in two product categories, toothpaste and laundry detergent. The data come from a unique panel of respondents in India where consumers purchase small and affordable single-use packages. Our analysis indicates that standard models of demand used to study wealthier consumers also apply to people in extreme poverty. https://www.dosomething.org/us/facts/11-facts-about-global-poverty

Original languageEnglish (US)
JournalInternational Journal of Research in Marketing
DOIs
StateAccepted/In press - Jan 1 2020

Keywords

  • Direct utility model
  • Extreme poverty
  • Horizontal variety

ASJC Scopus subject areas

  • Marketing

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