How Do Consumption Patterns Influence the Discrepancy Between Economic and Subjective Poverty?

Abstract

<p>This study examines an income and wellbeing paradox—the discrepancy between economic and subjective poverty—from a consumption perspective. The theoretical underpinning is that households allocate their monetary resources into different consumption categories, which may lead to varying levels of utility, thereby shaping their perceptions of poverty in different ways. Data were drawn from the first wave of the Hong Kong Panel Survey for Poverty Alleviation (N = 1386). Cluster analysis identified four consumption patterns among the economically poor: (a) food-dominant, (b) rent-dominant, (c) food & rent-dominant, and (d) balanced, and five among the economically non-poor: (a) food-dominant, (b) rent-dominant, (c) education-high, (d) mortgage-high, and (e) balanced. Logistic regression revealed that the food-dominant cluster (compared with the balanced cluster) reduced the probability of feeling non-poor among the economically poor, and the mortgage-high cluster (compared with the balanced cluster) increased the probability of feeling poor among the economically non-poor. However, the significant association between the mortgage-high cluster and subjective poverty became insignificant after controlling for assets. The mortgage-high cluster’s positive impact on subjective poverty was most likely offset by the negative impacts of homeownership and assets. The study’s findings expand our understanding of how individuals’ perceived poverty status can be shaped by their consumption patterns.<br></p>