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Using Functionings To Estimate Equivalence Scales

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  • Sara Lelli
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    Abstract

    Equivalence scales are used to enable welfare comparisons across heterogeneous households. In this paper, we propose to use the achievement of a certain level of functioning as the identifying assumption for the derivation of equivalence scales. This will allow us not only to deal with welfare comparisons between households of different size and composition, but will also enable us to incorporate other characteristics (such as location and employment status) in the creation of equivalence scales for welfare comparisons. The paper applies this approach to create equivalence scales for the functioning "shelter" using Belgian and Italian data. The analysis shows that the income differences associated with different characteristics only play a small role in explaining differences in functionings. An important policy message is therefore that compensating people for functioning shortfalls in monetary terms may not be sensible. Copyright 2005 Blackwell Publishing Ltd.

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    Bibliographic Info

    Article provided by International Association for Research in Income and Wealth in its journal Review of Income and Wealth.

    Volume (Year): 51 (2005)
    Issue (Month): 2 (06)
    Pages: 255-284

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    Handle: RePEc:bla:revinw:v:51:y:2005:i:2:p:255-284

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    Cited by:
    1. Sunil Kumar & Renuka Mahadevan, 2008. "Construction of An Adult Equivalence Index to Measure Intra-household Inequality and Poverty: Case Study," Discussion Papers Series 363, School of Economics, University of Queensland, Australia.
    2. Andrea Brandolini, 2008. "On applying synthetic indices of multidimensional well-being: health and income inequalities in selected EU countries," Temi di discussione (Economic working papers) 668, Bank of Italy, Economic Research and International Relations Area.
    3. J├╝rgen Faik, 2013. "Cross-Sectional and Longitudinal Equivalence Scales for West Germany Based on Subjective Data on Life Satisfaction," SOEPpapers on Multidisciplinary Panel Data Research 575, DIW Berlin, The German Socio-Economic Panel (SOEP).
    4. repec:ese:iserwp:2012-09 is not listed on IDEAS

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