The human visual system response to picture quality degradation due to packet loss is very different from the responses of objective quality measures. While video quality due to packet loss may be impaired by at most for one Group of Pictures (GOP), its subjective quality degradation may last for several GOPs. This has a great impact on resource allocation strategies, which normally make decisions on instantaneous conditions of multiplexing buffer. This is because, when the perceptual impact of degraded video quality is much longer than its objective degradation period, any assigned resources to the degraded flow is wasted. This paper, through both simulations and analysis shows that, during resource allocation, if the quality of a video stream is significantly degraded, it is better to penalize this degraded flow from getting its full bandwidth share and instead assign the remaining share to other flows preventing them from undergoing quality degradation.