To a poor person in India (or pick your favorite country with truly poor people), the American "poor" live in absurd excess. Surely they ought to have forgone

To a poor person in India (or pick your favorite country with truly poor people), the American "poor" live in absurd excess. Surely they ought to have forgone TV, a second pair of pants, and other non-essentials so that they could save up and avoid going hungry should a true hardship strike. What is the formula by which one should decide how much he can spend every year relative to his income and savings? Should one live at a level where he only has a 0.1% chance of "getting into trouble" should his personal circumstances or overall economic conditions change? What about 1%? What's the happiness-maximizing consumption risk level*? Should my services as a software guy only warrant $10/hour a couple of years from now, my family will be in trouble after we exhaust our savings. Should we have purchased a house given this risk? Or, should we rent in a slum and save our money for the dark times that might await us? Obviously, this woman and her family won't starve. And, I have little compassion for those who spend when they shouldn't just to hide their new-found financial state. But, to suggest that this woman behaved irresponsibly while taking pity on the factory guy who got laid off from his union job and can't afford his two SUVs is punishing one's overall level of wealth rather than his choice of consumption risk level.