Econometrica

Journal Of The Econometric Society

An International Society for the Advancement of Economic
Theory in its Relation to Statistics and Mathematics

Edited by: Guido W. Imbens • Print ISSN: 0012-9682 • Online ISSN: 1468-0262

Econometrica: Jan, 2003, Volume 71, Issue 1

Equivalence Scales Reconsidered

https://doi.org/10.1111/1468-0262.00397
p. 319-343

Udo Ebert, Patrick Moyes

The paper proposes a new and normative approach for adjusting households’ incomes in order to account for the heterogeneity of needs across income recipients when measuring inequality and welfare. We derive the implications for the structure of the adjustment method of two conditions concerned with the way the ranking of situations is modified by a change in the reference household type and by more equally distributed living standards across households. Our results suggest that concern for greater equality in living standards conflicts with the basic welfarist principle of symmetrical treatment of individuals that is at the core of the standard equivalence scale approach.


Log In To View Full Content