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Equivalence Scales Reconsidered

Author

Listed:
  • Udo Ebert

    () (Carl von Ossietzky Universitat Oldenburg, Germany;)

  • Patrick Moyes

    () (CNRS, IDEP and GRAPE, Universite Montesquieu Bordeaux IV, France)

Abstract

The paper proposes a new and normative approach for adjusting households' incomes in order to account for the heterogeneity of needs across income recipients when measuring inequality and welfare. We derive the implications for the structure of the adjustment method of two conditions concerned with the way the ranking of situations is modified by a change in the reference household type and by more equally distributed living standards across households. Our results suggest that concern for greater equality in living standards conflicts with the basic welfarist principle of symmetrical treatment of individuals that is at the core of the standard equivalence scale approach. Copyright The Econometric Society 2003.

Suggested Citation

  • Udo Ebert & Patrick Moyes, 2003. "Equivalence Scales Reconsidered," Econometrica, Econometric Society, vol. 71(1), pages 319-343, January.
  • Handle: RePEc:ecm:emetrp:v:71:y:2003:i:1:p:319-343
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