Please use this identifier to cite or link to this item: http://hdl.handle.net/10419/228333
Authors: 
Daley, Angela
Garner, Thesia Isedora
Phipps, Shelley A.
Sierminska, Eva
Year of Publication: 
2020
Series/Report no.: 
LIS Working Paper Series No. 781
Abstract: 
Equivalence scales are often used to adjust household income for differences in characteristics that affect needs. For example, a family of two is assumed to need more income than a single person, but not double due to economies of scale in consumption. However, in comparing economic well-being across countries and/or time, we ask whether it is appropriate to use the same equivalence scale if consumption expenditure patterns differ? We estimate equivalence scales for eight countries with data ranging from 1999 to 2012, using the same Engel approach in all cases. We find considerable variation in economies of scale across countries and some increases over time. Notably, we find that economies of scale are generally larger than those implied by the 'square root of household size' equivalence scale. Our results have important implications when deciding whether to use a common equivalence scale in comparisons of economic well-being across place and time.
Subjects: 
economic well-being
Engel
necessities
equivalence scale
economies of scale
poverty
JEL: 
D12
I31
Document Type: 
Working Paper

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