Family Living Allotment 



The family living allowance is that portion of income used for con- 

 sumer goods. Such goods include food, clothing, furniture and furnish- 

 ings for the home, medical care, personal care, life and accident insur- 

 ance premiums, newspapers, magazines, hooks, educational expenses, 

 amusements, contrihutions and state and federal income taxes. 18 



There are definite relationships between changes in income and 

 changes in family consumption. As the level of income increases, family 

 consumption increases, but at a slower rate. However, when the level of 

 income falls, family consumption declines, but at a slower rate. Thus, it 

 is possible to conceptualize a long-run consumption function for a family 

 which will indicate the changes in the level of consumption accompany- 

 ing changes in the level of income. But if the family has had a level of 

 income that has remained constant for some time so that the level of 

 consumption has also become constant, a decline in the level of income 

 will not result in a fall in consumption based on the long-run consump- 

 tion function. Instead, a new consumption function much flatter in slope 

 is developed. On this function, consumption declines at a much slower 

 rate than income. In Figure 11, the long-run consumption function is the 

 line AB. The short-run function, A'b, indicates the new relationship be- 

 tween consumption and declines in the level of income. 



The short-run function with its rather flat slope is a result of the fam- 

 ily unit attempting to maintain its accustomed standard of living. Gener- 

 ally, consumers will resist lowering their standard of living even if it re- 

 quires using past accumulations of savings. 



It is not possible to establish a single consumption function that will 

 be representative for all broiler grower families. For example, two grow- 

 ers receiving identical annual incomes may spend different amounts on 

 consumption. This difference is a result of many factors. First, the two 

 families may have different habits and standards, so that one family con- 

 sumes more than another. Second, the two families may live in different 

 communities, and the communities may differ in standard of living. 

 Since consumer behavior is considered to be interdependent, the fami- 

 lies in the community with the higher standard of living will spend more 

 of their income to attain and maintain that standard of living. 19 Al- 

 though Duesenberry only used urban families in his development of the 

 interdependence theory, there is little reason to think that rural families 

 behave differently. Third, the size of the family will also influence the 

 amount of income used for consumption. Although there are a great 

 many other factors involved in explaining consumer behavior, the three 

 mentioned above assist in explaining the difficulty of determining a con- 

 sumption function for broiler growers as a group. From the evidence 

 presented by studies on farm budgets, family living expenditures appear 

 to be the least flexible item when changes in income occur. 20 



!8 See Longmore, T. W. and Taylor, C. C, "Elasticities of Expenditures for Farm 

 Family Living, Farm Production, and Savings, United States, 1946," Journal of Farm 

 Economics, Vol. XXXIII, February 1951, pp. 1-20. 



19 See Duesenberry, J. S., Income, Saving, and the Theory of Consumer Behavior, 

 Harvard University Press, 1949. 



20 Longmore and Taylor, Op. Cit., P. 3. 



27 



