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Household Cost Functions And Equivalence Scales

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  • van Praag, B. M. S.
  • van der Sar, N. L.

Abstract

In this paper we describe a simple method to estimate household cost functions and family equivalence scales. It is an alternative to standard methods as it does not assume strong postulates about utility maximization nor any functionally specified model equations. The data requirements are extremely modest. We assume interpersonal ordinal comparability in the sense of Sen (1976). Empirical evidence for eight European countries and the U.S.A. shows the feasibility of the method and the stability of its results.

Suggested Citation

  • van Praag, B. M. S. & van der Sar, N. L., 1986. "Household Cost Functions And Equivalence Scales," Econometric Institute Archives 272358, Erasmus University Rotterdam.
  • Handle: RePEc:ags:eureia:272358
    DOI: 10.22004/ag.econ.272358
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    File URL: https://ageconsearch.umn.edu/record/272358/files/erasmus192.pdf
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    References listed on IDEAS

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    1. Diane Colasanto & Arie Kapteyn & Jacques van der Gaag, 1984. "Two Subjective Definitions of Poverty: Results from the Wisconsin Basic Needs Study," Journal of Human Resources, University of Wisconsin Press, vol. 19(1), pages 127-138.
    2. Gerald L. Thompson & Fred M. Tonge & Stanley Zionts, 1966. "Techniques for Removing Nonbinding Constraints and Extraneous Variables from Linear Programming Problems," Management Science, INFORMS, vol. 12(7), pages 588-608, March.
    3. Muellbauer, John, 1977. "Testing the Barten Model of Household Composition Effects and the Cost of Children," Economic Journal, Royal Economic Society, vol. 87(347), pages 460-487, September.
    4. van Praag, Bernard M S & Spit, Jan S & van de Stadt, Huib, 1982. "A Comparison between the Food Ratio Poverty Line and the Leyden Poverty Line," The Review of Economics and Statistics, MIT Press, vol. 64(4), pages 691-694, November.
    5. Van Praag, Bernard M. S. & Kapteyn, Arie, 1973. "Further evidence on the individual welfare function of income: An empirical investigatiion in The Netherlands," European Economic Review, Elsevier, vol. 4(1), pages 33-62, April.
    6. van Praag, Bernard & Goedhart, Theo & Kapteyn, Arie, 1980. "The Poverty Line-A Pilot Survey in Europe," The Review of Economics and Statistics, MIT Press, vol. 62(3), pages 461-465, August.
    7. Samuelson, Paul A, 1974. "Complementarity-An Essay on the 40th Anniversary of the Hicks-Allen Revolution in Demand Theory," Journal of Economic Literature, American Economic Association, vol. 12(4), pages 1255-1289, December.
    8. Deaton,Angus & Muellbauer,John, 1980. "Economics and Consumer Behavior," Cambridge Books, Cambridge University Press, number 9780521296762.
    9. Theo Goedhart & Victor Halberstadt & Arie Kapteyn & Bernard van Praag, 1977. "The Poverty Line: Concept and Measurement," Journal of Human Resources, University of Wisconsin Press, vol. 12(4), pages 503-520.
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