The rich and the poor

11 years 9 months ago

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This short explores the differences between a rich and a poor in consumption and need satisfaction. It's a fairly abstract analysis because it is oriented by a formal model expressed in an MS Excel spreadsheet (attached) and it leverages a new key concept we introduced: the cumulative bundle (http://www.economicswebinstitute.org/glossary/cumulativebundle.htm). The paper considers two people with widely different income per period (e.g. month), facing a flow of decision to select whether to buy or not a certain good. The properties of the goods are explicited in a matrix in which each good has a price, lifetime (0 to infinity), percentage of need satisfaction on a range of needs (negative values possible), a revenue it provides and the costs for operation and maintenance it requires. After a large number of periods, the rich has a much larger cumulative bundle, in terms of the number of goods and a higher percentage of need satisfaction (even higher than 100% and with duplicativ...

Valentino Piana

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