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Is There Bias In Computing Household Equivalence Scales?

Author

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  • M. Luisa Ferreira
  • Reuben C. Buse
  • Jean‐Paul Chavas

Abstract

Household equivalence scales are often used to help perform welfare comparisons across households with different demographic composition. Abstracting from the problems of value judgments and ethical standards, the use of equivalence scales to perform welfare comparisons still faces several measurement problems, namely the identification problem and the endogeneity problem. This paper introduces and estimates an unconditional demand system that simultaneously addresses these two problems. By explicitly considering the demand for leisure, and the fact the household can choose some of its demographic characteristics, we deal with the endogeneity problem and obtain consistent estimates. We identify unconditional equivalence scales by estimating the demand for endogenous demographic variables along with the demand for leisure and consumer goods. More general equivalence scales allowing for better comparability are estimated and used for welfare comparisons.

Suggested Citation

  • M. Luisa Ferreira & Reuben C. Buse & Jean‐Paul Chavas, 1998. "Is There Bias In Computing Household Equivalence Scales?," Review of Income and Wealth, International Association for Research in Income and Wealth, vol. 44(2), pages 183-198, June.
    • Handle: RePEc:bla:revinw:v:44:y:1998:i:2:p:183-198
    DOI: 10.1111/j.1475-4991.1998.tb00267.x
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    Cited by:

    1. Alfred Michael Dockery & Sherry Bawa, 2015. "The Impact of Children on Australian Couples’ Wealth Accumulation," The Economic Record, The Economic Society of Australia, vol. 91(S1), pages 139-150, June.
    2. Regier, Gregory & Zereyesus, Yacob & Dalton, Timothy & Amanor-Boadu, Vincent, 2015. "Do Adult Equivalence Scales Matter in Poverty Estimates? A Ghana Case Study," 2015 Conference, August 9-14, 2015, Milan, Italy 212487, International Association of Agricultural Economists.
    3. White, Howard & Masset, Edoardo, 2002. "Child poverty in Vietnam: using adult equivalence scales to estimate income-poverty for different age groups," MPRA Paper 777, University Library of Munich, Germany.
    4. Mohamed Amara & Hatem Jemmali, 2018. "Household and Contextual Indicators of Poverty in Tunisia: A Multilevel Analysis," Social Indicators Research: An International and Interdisciplinary Journal for Quality-of-Life Measurement, Springer, vol. 137(1), pages 113-138, May.

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