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


  • Lancaster, Geoffrey
  • Ray, Ranjan


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.

Suggested Citation

  • Lancaster, Geoffrey & Ray, Ranjan, 1998. "Comparison of Alternative Models of Household Equivalence Scales: The Australian Evidence on Unit Record Data," The Economic Record, The Economic Society of Australia, vol. 74(224), pages 1-14, March.
  • Handle: RePEc:bla:ecorec:v:74:y:1998:i:224:p:1-14

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    References listed on IDEAS

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    Cited by:

    1. Mardi Dungey & Vitali Alexeev & Jing Tian & Alfred Michael Dockery & Sherry Bawa, 2015. "The Impact of Children on Australian Couples’ Wealth Accumulation," The Economic Record, The Economic Society of Australia, vol. 91, pages 139-150, June.
    2. Hikaru Hasegawa & Kazuhiro Ueda & Kunie Mori, 2008. "Estimation of Engel Curves from Survey Data with Zero Expenditures," Oxford Bulletin of Economics and Statistics, Department of Economics, University of Oxford, vol. 70(4), pages 535-558, August.
    3. Majumder, Amita & Ray, Ranjan & Sinha, Kompal, 2015. "Spatial Comparisons Of Prices And Expenditure In A Heterogeneous Country: Methodology With Application To India," Macroeconomic Dynamics, Cambridge University Press, vol. 19(05), pages 931-989, July.
    4. Amita Majumder & Ranjan Ray & Kompal Sinha, 2014. "A Unified Framework for the Estimation of Intra and Inter Country Food Purchasing Power Parities with Application to Cross Country Comparisons of Food Expenditure: India, Indonesia and Vietnam," Monash Economics Working Papers 31-14, Monash University, Department of Economics.
    5. 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.
    6. 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.
    7. 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.
    8. 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.
    9. Aleksandr Vashchilko, 2012. "Households' Expenditure Patterns in Belarus," BEROC Working Paper Series 20, Belarusian Economic Research and Outreach Center (BEROC).
    10. Christian Dudel & Jan Marvin Garbuszus & Notburga Ott & Martin Werding, 2015. "Income Dependent Equivalence Scales, Inequality, and Poverty," CESifo Working Paper Series 5568, CESifo Group Munich.
    11. Reiner Buchegger & Michael Wüger, 2004. "Private Expenditures for Children in Austria. Variations in Results Applying Different Models," WIFO Working Papers 227, WIFO.
    12. Reiner Buchegger & Michael Wüger, 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.
    13. Paul Blacklow & Ranjan Ray, 2000. "A Comparison of Income and Expenditure Inequality Estimates: The Australian Evidence, 1975-76 to 1993-94," Australian Economic Review, The University of Melbourne, Melbourne Institute of Applied Economic and Social Research, vol. 33(4), pages 317-329.
    14. Garcia-Diaz Rocio, 2012. "Demand-Based Cost-of-Children Estimates and Child Poverty," The B.E. Journal of Economic Analysis & Policy, De Gruyter, vol. 12(1), pages 1-32, January.
    15. 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.
    16. Dudel, Christian & Garbuszus, Jan Marvin & Schmied, Julian, 2017. "Assessing differences in household needs: A comparison of approaches for the estimation of equivalence scales using German expenditure data," Ruhr Economic Papers 723, RWI - Leibniz-Institut für Wirtschaftsforschung, Ruhr-University Bochum, TU Dortmund University, University of Duisburg-Essen.
    17. Amita Majumder & Ranjan Ray, 2015. "Estimates of Spatial Prices in India and their Sensitivity to Alternative Estimation Methods and Choice of Items," Monash Economics Working Papers 11-15, Monash University, Department of Economics.

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