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Semiparametric estimation of equivalence scales using subjective information

Author

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  • Melenberg, B.

    (Tilburg University, Center For Economic Research)

  • van Soest, A.H.O.

    (Tilburg University, Center For Economic Research)

Abstract

Household equivalence scales are not identified from consumer demand data alone. We estimate household equivalence scales using two types of subjective information. First, we use the answers to questions on the income required to attain a given utility level. This is the type of information often used in this type of research. We compare the results for the usual linear model with semiparametric estimates, in which the functional form of the relationship between required income and family size and actual income is left unspecified. Second, we use answers to the question: how satisfied are you with actual household income? We present parametric and semiparametric estimates for the ordered response model explaining this discrete variable, which has possible outcomes 1,2,...,10. We find that according to the second type of information, costs of children are much larger than according to the first.

Suggested Citation

  • Melenberg, B. & van Soest, A.H.O., 1995. "Semiparametric estimation of equivalence scales using subjective information," Discussion Paper 1995-71, Tilburg University, Center for Economic Research.
  • Handle: RePEc:tiu:tiucen:250cc708-150d-4f3b-bc34-b7e2e4336fa1
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    References listed on IDEAS

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    Cited by:

    1. Ahlheim, Michael & Schneider, Friedrich, 2013. "Considering household size in contingent valuation studies," MPRA Paper 62898, University Library of Munich, Germany.
    2. Christian Dudel & Notburga Ott & Martin Werding, 2013. "Maintaining One's Living Standard at Old Age - What Does That Mean?: Evidence Using Panel Data from Germany," SOEPpapers on Multidisciplinary Panel Data Research 563, DIW Berlin, The German Socio-Economic Panel (SOEP).
    3. Michael Ahlheim & Ulrike Lehr, 2008. "Equity and Aggregation in Environmental Valuation," Diskussionspapiere aus dem Institut für Volkswirtschaftslehre der Universität Hohenheim 295/2008, Department of Economics, University of Hohenheim, Germany.

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    Keywords

    Household Economics; microeconomics;

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