Underconsumption

Bleaney, M.F. (1976) Underconsumption Theories, London Lawrence and Wishart. 

The objective function (4.1) minimizes the efficiency measure E. For the smallest E obtained the slack variables are maximized. This objective hierarchy is achieved by including the "very small" parameter 8 that subordinates the maximization of the slack variables under the minimization of E. Equations (4.2) and (4.3) specify the output and input factor comparisons. The slack variables contain the surplus of output factors and underconsumption of input factors respectively as compared to the virtual DMU. The weight parameters 7ru are determined by the optimization model and describe the linear combination of real DMUs constituting the virtual DMU. Restriction (4.4) contains non-negativity constraints. 

Overproduction is not synonymous with underconsumption, since the latter term refers exclusively to lack of elfective demand for consumption goods. Crises of underconsumption must also be distinguished from the (hypothetical) crises that could arise from over-saving. In Otpital U Marx explicitly distinguishes between these two contradictions of capitalism" ... 

Bleaney, M. Underconsumption Theories. New York International Publishers 1977. 

Outcomes include reducing inequalities in health, compensating for the presence of externalities, and addressing the distortions caused by incomplete and asymmetrical information. In the case of externalities, the problem is often one of underconsumption of services that (for example) lead to lower population growth rates or reduce the transmission of communicable disease. The impact of subsidies should therefore be measured in terms of how well they achieve specific outcomes, such as lower birth rates and transmission of infectious disease. 

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