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A Specification Separating Family Size And Individual Age Effects On Subjective Equivalence Scales: A Note

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  • Thomas Klein

Abstract

This paper analyses the Kapteyn and Van Praag method of estimating equivalence scales with respect to the way family size and age composition are incorporated into the scales according to rank and age of each family member. It becomes evident that the Kapteyn/Van Praag procedure fails to distinguish between household size and individual age effects with the result that personal weights can not be used for recomposition of household types other than wife and husband families, nor can they be interpreted as showing real age dependence of personal income equivalence. For these reasons another specification of the general approach, separating both effects, is outlined. This specification distinguishes between several consumption classes within each household. Within each class, economies of scale are attached to similar individuals while differences in individual need are obtained by comparing individuals with the same rank in the different classes.

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  • Thomas Klein, 1988. "A Specification Separating Family Size And Individual Age Effects On Subjective Equivalence Scales: A Note," Review of Income and Wealth, International Association for Research in Income and Wealth, vol. 34(2), pages 209-219, June.
    • Handle: RePEc:bla:revinw:v:34:y:1988:i:2:p:209-219
    DOI: 10.1111/j.1475-4991.1988.tb00568.x
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