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Chapter 13 The Construction and Estimation of Equivalence Scales and Their Uses

In: Quantifying Consumer Preferences

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  • Carsten Schröder

Abstract

Equivalence scales are deflators (or “scales”) by which the incomes of different household types can be converted to a comparable, needs-adjusted basis. They are measures of intra-household sharing potentials and differences in family members’ needs (i.e., of adults vs. children). One strand of literature uses econometric approaches to derive equivalence scales from household expenditure and time-use data. Another strand uses survey responses of people to quantify equivalence scales directly. Equivalence scales are potentially useful in several areas such as welfare-system design, income taxation, measurement of poverty and inequality, and determining lost earnings damages. This chapter surveys the literature on equivalence scales and presents some applications.

Suggested Citation

  • Carsten Schröder, 2009. "Chapter 13 The Construction and Estimation of Equivalence Scales and Their Uses," Contributions to Economic Analysis, in: Quantifying Consumer Preferences, pages 349-362, Emerald Group Publishing Limited.
    • Handle: RePEc:eme:ceazzz:s0573-8555(2009)0000288016
    DOI: 10.1108/S0573-8555(2009)0000288016
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    equivalence scales;

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