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De gustibus non est disputandum? A new approach to the estimation of equivalence scales

Author

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  • Mauro Maltagliati

    (Department of Statistics “G. Parenti”)

  • Gustavo Santis

    (Un. of Messina)

Abstract

We argue that when the household composition changes, consumption patterns vary not only because of the cost effect that equivalence scales try to measure, but also because of a “taste” or “style” effect. This effect can be identified and measured, under a few assumptions, with the use of a new methodology, calledDM 2 (Decomposition Model of the effects of Demographic Metamorphosis), that can be viewed as a generalisation of Ray's (1983) price-scaling approach to the construction of equivalent scales. An empirical application to data drawn from the Istat 1995 Italian Household Budget Survey suggests that the proposed method improves our understanding of households' consumption patterns and the reliability of the equivalence scales that we derive.

Suggested Citation

  • Mauro Maltagliati & Gustavo Santis, 2001. "De gustibus non est disputandum? A new approach to the estimation of equivalence scales," Statistical Methods & Applications, Springer;Società Italiana di Statistica, vol. 10(1), pages 211-236, January.
    • Handle: RePEc:spr:stmapp:v:10:y:2001:i:1:d:10.1007_bf02511649
    DOI: 10.1007/BF02511649
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    References listed on IDEAS

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