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Income-dependent equivalence scales and choice theory: implications for poverty measurement

In: Research Handbook on Measuring Poverty and Deprivation

Author

Listed:
  • Christos Koulovatianos
  • Carsten Schröder

Abstract

Equivalence Scales are a tool for removing the heterogeneity of household sizes in the measurement of inequality, and affect poverty assessments and poverty lines. We address the disadvantage that poor households may suffer due to their reduced ability to share goods within the household. This disadvantage is important to estimate and embed in standard analysis, as it seems to have a substantial quantitative impact on the measurement of poverty. We also suggest that future research on the role of subsistence incomes of different household types in utility functions may shed light on explanations for poverty and may guide anti-poverty policies.

Suggested Citation

  • Christos Koulovatianos & Carsten Schröder, 2023. "Income-dependent equivalence scales and choice theory: implications for poverty measurement," Chapters, in: Jacques Silber (ed.), Research Handbook on Measuring Poverty and Deprivation, chapter 4, pages 39-49, Edward Elgar Publishing.
    • Handle: RePEc:elg:eechap:20574_4
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    References listed on IDEAS

    as
    1. Banks, James & Johnson, Paul, 1994. "Equivalence Scale Relativities Revisited," Economic Journal, Royal Economic Society, vol. 104(425), pages 883-890, July.
    2. Carolina Achury & Sylwia Hubar & Christos Koulovatianos, 2012. "Saving Rates and Portfolio Choice with Subsistence Consumption," Review of Economic Dynamics, Elsevier for the Society for Economic Dynamics, vol. 15(1), pages 108-126, January.
    3. Christos Koulovatianos & Carsten Schröder & Ulrich Schmidt, 2005. "Properties of Equivalence Scales in Different Countries," Journal of Economics, Springer, vol. 86(1), pages 19-27, October.
    4. Timothy Smeeding & Gunther Schmaus & Brigitte Buhmann & Lee Rainwater, 1988. "Equivalence Scales, Well-Being, Inequality and Poverty: Sensitivity Estimates Across Ten Countries Using the LIS Database," LIS Working papers 17, LIS Cross-National Data Center in Luxembourg.
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    20. Koulovatianos, Christos & Schröder, Carsten & Schmidt, Ulrich, 2006. "Family-type subsistence incomes," Discussion Papers 2006/5, Free University Berlin, School of Business & Economics.
    21. Richard V. Burkhauser & Timothy M. Smeeding & Joachim Merz, 1996. "Relative Inequality And Poverty In Germany And The United States Using Alternative Equivalence Scales," Review of Income and Wealth, International Association for Research in Income and Wealth, vol. 42(4), pages 381-400, December.
    22. Hubar, Sylwia & Koulovatianos, Christos & Li, Jian, 2020. "The role of labor-income risk in household risk-taking," European Economic Review, Elsevier, vol. 129(C).
    23. Newhouse, David & Suárez Becerra, Pablo & Evans, Martin, 2017. "New global estimates of child poverty and their sensitivity to alternative equivalence scales," Economics Letters, Elsevier, vol. 157(C), pages 125-128.
    24. Donaldson, David & Pendakur, Krishna, 2006. "The Identification of Fixed Costs From Consumer Behavior," Journal of Business & Economic Statistics, American Statistical Association, vol. 24, pages 255-265, July.
    25. Daniel T. Slesnick, 1998. "Empirical Approaches to the Measurement of Welfare," Journal of Economic Literature, American Economic Association, vol. 36(4), pages 2108-2165, December.
    26. Carolina Achury & Sylwia Hubar & Christos Koulovatianos, 2012. "Saving Rates and Portfolio Choice with Subsistence Consumption," Review of Economic Dynamics, Elsevier for the Society for Economic Dynamics, vol. 15(1), pages 108-126, January.
    27. Kools, Lieke & Knoef, Marike, 2019. "Health and consumption preferences; estimating the health state dependence of utility using equivalence scales," European Economic Review, Elsevier, vol. 113(C), pages 46-62.
    28. Gronau, Reuben, 1973. "The Intrafamily Allocation of Time: The Value of the Housewives' Time," American Economic Review, American Economic Association, vol. 63(4), pages 634-651, September.
    29. Klaas de Vos & M. Asghar Zaidi, 1997. "Equivalence Scale Sensitivity Of Poverty Statistics For The Member States Of The European Community," Review of Income and Wealth, International Association for Research in Income and Wealth, vol. 43(3), pages 319-333, September.
    30. Christos Koulovatianos & Carsten Schröder & Ulrich Schmidt, 2005. "Properties of Equivalence Scales in Different Countries," Journal of Economics, Springer, vol. 86(1), pages 19-27, October.
    31. Lewbel, Arthur, 1989. "Household equivalence scales and welfare comparisons," Journal of Public Economics, Elsevier, vol. 39(3), pages 377-391, August.
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    More about this item

    Keywords

    Development Studies; Economics and Finance; Geography; Research Methods; Sociology and Social Policy;
    All these keywords.

    JEL classification:

    • I32 - Health, Education, and Welfare - - Welfare, Well-Being, and Poverty - - - Measurement and Analysis of Poverty
    • D14 - Microeconomics - - Household Behavior - - - Household Saving; Personal Finance
    • D63 - Microeconomics - - Welfare Economics - - - Equity, Justice, Inequality, and Other Normative Criteria and Measurement
    • D15 - Microeconomics - - Household Behavior - - - Intertemporal Household Choice; Life Cycle Models and Saving

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