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Comparison of Alternative Models of Household Equivalence Scales: The Australian Evidence on Unit Record Data

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  • Lancaster, Geoffrey
  • Ray, Ranjan

Abstract

The equivalence scale is an important parameter in view of its use in welfare comparisons. This paper investigates sensitivity of the scale to models, methods, and commodities. The estimations range from single equation, OLS in case of Engel and Rothbarth models to maximum likelihood in case of demographic demand systems. The estimated scales from demand systems generally lie between the Engel and Rothbarth scales. The equivalence scale exactness hypothesis, considered necessary for interpretation of the scale as child cost, suffers only a mild rejection. The Australian evidence suggests that rank two demand models, rejected by the data, may exaggerate child costs. Copyright 1998 by The Economic Society of Australia.

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Bibliographic Info

Article provided by The Economic Society of Australia in its journal The Economic Record.

Volume (Year): 74 (1998)
Issue (Month): 224 (March)
Pages: 1-14

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Handle: RePEc:bla:ecorec:v:74:y:1998:i:224:p:1-14

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Cited by:
  1. White, Howard & Masset, Edoardo, 2002. "Child poverty in Vietnam: using adult equivalence scales to estimate income-poverty for different age groups," MPRA Paper 777, University Library of Munich, Germany.
  2. Reiner Buchegger & Michael Wüger, 2004. "Private Expenditures for Children in Austria. Variations in Results Applying Different Models," WIFO Working Papers 227, WIFO.
  3. Reiner Buchegger & Michael W�ger, 2004. "Private expenditures for children in Austria - Variations in results applying different models," Economics working papers 2004-08, Department of Economics, Johannes Kepler University Linz, Austria.
  4. Ranjan Ray, 2000. "Poverty and expenditure pattern of households in Pakistan and South Africa: a comparative study," Journal of International Development, John Wiley & Sons, Ltd., vol. 12(2), pages 241-256.
  5. Maitra, Pushkar & Ray, Ranjan, 2003. "The effect of transfers on household expenditure patterns and poverty in South Africa," Journal of Development Economics, Elsevier, vol. 71(1), pages 23-49, June.
  6. Blacklow, P. & Ray, R., 1999. "A Comparison of Income and Expenditure Inequality Estimates: the Australian Evidence, 1975/76 to 1993/94," Papers 1999-05, Tasmania - Department of Economics.
  7. Amita Majumder & Ranjan Ray & Kompal Sinha, 2012. "Spatial Comparisons of Prices and Expenditure in a Heterogeneous Country: Methodology with Application to India," Monash Economics Working Papers 19-12, Monash University, Department of Economics.
  8. Majumder, Amita & Chakrabarty, Manisha, 2003. "Relative cost of children: the case of rural Maharashtra, India," Journal of Policy Modeling, Elsevier, vol. 25(1), pages 61-76, January.
  9. Griffiths, W.E. & Valenzuela, R., 2001. "Estimating Costs of Children from Micro-Unit Records: A New Procedure Applied to Australian Data," Department of Economics - Working Papers Series 795, The University of Melbourne.

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