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Tout est au mieux dans ce meilleur des ménages possibles The Pangloss critique of equivalence scales

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Author Info
Jo Thori Lind () (Statistics Norway)

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Abstract

A common approach to defining equivalence scales is to consider a household modelled as if it maximizes a single utility function. This may be founded on an assumption of the household maximizing a welfare function of individual utilities. For a positive analysis of the household, this may be appropriate, but it is argued that basing inter-household comparisons of welfare on this approach is generally not valid. The household will generally put different weight on the utility of the various household members, and this weighting does not necessarily correspond to society's aggregation of utility. This complication is called the Pangloss problem. An alternative definition of equivalence scales taking this into account is introduced and discussed.

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Paper provided by Research Department of Statistics Norway in its series Discussion Papers with number 296.

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Date of creation: Apr 2001
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Handle: RePEc:ssb:dispap:296

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Related research
Keywords: Equivalence scales; household; welfare function; Pangloss problem; intra-household distribution; children;

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Find related papers by JEL classification:
D11 - Microeconomics - - Household Behavior - - - Consumer Economics: Theory
D12 - Microeconomics - - Household Behavior - - - Consumer Economics: Empirical Analysis
D31 - Microeconomics - - Distribution - - - Personal Income and Wealth Distribution
D63 - Microeconomics - - Welfare Economics - - - Equity, Justice, Inequality, and Other Normative Criteria and Measurement

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