The adequacy of income: A social dimension in economic development

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Abstract
The adequacy of income of a household may be defined as the ratio of its income to the income level required to achieve the conventional standard of living in the socio‐economic group to which the household belongs. This concept has greater relevance than that of income for the study of consumer behaviour (e.g. propensity to save) and other social behaviour and pathologies. Income and need for income in a country do not necessarily rise proportionately over time, thus resulting in periods of declining, as well as periods of rising, income adequacy. Furthermore, in spite of the international demonstration effect, the need for income in developing countries is significantly lower than in developed countries resulting in a much smaller gap between income adequacies than between incomes.

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