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A local equivalence scale and its information basis

Author

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  • Grodner, Andrew
  • Lasso de la Vega, Casilda
  • Salas, Rafael
  • Zeager, Lester A.

Abstract

We identify an information basis that is necessary and sufficient for a local equivalence scale, constructed using the indifference surface associated with a poverty level of well-being. It makes less restrictive assumptions about preferences for households with different characteristics than widely used approaches to this problem. Our approach is best suited for poverty comparisons, where calibration of means-tested transfers for different households is an important practical problem.

Suggested Citation

  • Grodner, Andrew & Lasso de la Vega, Casilda & Salas, Rafael & Zeager, Lester A., 2022. "A local equivalence scale and its information basis," Economics Letters, Elsevier, vol. 216(C).
    • Handle: RePEc:eee:ecolet:v:216:y:2022:i:c:s0165176522001665
    DOI: 10.1016/j.econlet.2022.110572
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    References listed on IDEAS

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    1. Sen, Amartya K, 1977. "On Weights and Measures: Informational Constraints in Social Welfare Analysis," Econometrica, Econometric Society, vol. 45(7), pages 1539-1572, October.
    2. Krishna Pendakur, 2018. "Welfare analysis when people are different," Canadian Journal of Economics, Canadian Economics Association, vol. 51(2), pages 321-360, May.
    3. Pierre‐André Chiappori, 2016. "Equivalence versus Indifference Scales," Economic Journal, Royal Economic Society, vol. 0(592), pages 523-545, May.
    4. Sen, Amartya, 1974. "Informational bases of alternative welfare approaches : Aggregation and income distribution," Journal of Public Economics, Elsevier, vol. 3(4), pages 387-403, November.
    5. Lewbel, Arthur, 1989. "Household equivalence scales and welfare comparisons," Journal of Public Economics, Elsevier, vol. 39(3), pages 377-391, August.
    6. John Bishop & Andrew Grodner & Haiyong Liu & Ismael Ahamdanech-Zarco, 2014. "Subjective poverty equivalence scales for Euro Zone countries," The Journal of Economic Inequality, Springer;Society for the Study of Economic Inequality, vol. 12(2), pages 265-278, June.
    7. Martin Biewen & Andos Juhasz, 2017. "Direct Estimation of Equivalence Scales and More Evidence on Independence of Base," Oxford Bulletin of Economics and Statistics, Department of Economics, University of Oxford, vol. 79(5), pages 875-905, October.
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    Cited by:

    1. Steven F. Koch, 2023. "Basic Needs (in)Security and Subjective Equivalence Scales," Social Indicators Research: An International and Interdisciplinary Journal for Quality-of-Life Measurement, Springer, vol. 169(3), pages 723-757, October.

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    More about this item

    Keywords

    Local equivalence scales; Information basis; Poverty comparisons;
    All these keywords.

    JEL classification:

    • D11 - Microeconomics - - Household Behavior - - - Consumer Economics: Theory
    • I3 - Health, Education, and Welfare - - Welfare, Well-Being, and Poverty
    • I32 - Health, Education, and Welfare - - Welfare, Well-Being, and Poverty - - - Measurement and Analysis of Poverty

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