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Equivalence scales based on Subjective Income Evaluations: Are children really cheap?

Published online by Cambridge University Press:  17 August 2016

Karel Van den Bosch
Karel Van den Bosch*
Affiliation:
Centre for Social Policy, University of Antwerp (UFSIA)
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Summary

Answers of sample survey respondents to questions like the following one: “In the circumstances of your household, what income would you regard as the minimum (or good/bad/sufficient, etc.) for your household?” can be used to estimate equivalence scales. It is sometimes claimed that this is a simple and cheap method to obtain “true” equivalence scales. Typically, these scales are much flatter than those derived from consumption behaviour data, or those incorporated in official poverty lines. A number of possible reasons have been advanced for this result. Yet, using subjective data does not necessarily result in a flat equivalence scale. Equivalence scales can also be estimated from answers to direct survey questions on how satisfied the respondent is with his or her household income, and these scales are often quite steep. In this paper, an application of both methods is reported. A number of possible reasons for the discrepancy are explored. In particular, the effects of a wide range of exogenous variables are examined. Data are from the 1985 and 1988 waves of the Belgian Socio-Economic Panel, a household income survey. The conclusion is that the discrepancy between the equivalence scales persists, even when controlling for a large number of possibly intervening factors.

Résumé

Résumé

Les réponses, lors de sondage, à des questions telles que: ‘Dans le cadre de votre ménage, quel revenu considérez-vous comme minimal (ou, bien/mauvais/suffisant, etc.) pour votre ménage?’ peuvent être utilisées pour estimer des échelles d’équivalence. Il est parfois affirmé que cette méthode, simple et bon-marché, permet d’obtenir une ‘véritable’ échelle d’équivalence. Typiquement, ces échelles sont beaucoup plus plates que celles découlant de l’analyse de données sur les comportements de consommation, ou celles incorporées dans les lignes officielles de pauvreté. Un nombre de raisons possibles ont été proposées pour expliquer ce résultat. Cependant, l’utilisation de données subjectives n’engendre pas nécessairement des échelles d’équivalence plates. Les échelless d’équivalence peuvent aussi être estimées sur base des réponses à la question ‘êtes-vous satisfait du revenu de votre ménage?’. Ces échelles sont souvent assez raides. Dans ce papier, une application des deux méthodes est proposée. Un nombre de raisons possibles expliquant les différences sont explorées. En particulier, les effets d’une gamme étendue de variables exogènes sont examinées. Les données proviennent du Panel socio-économique belge de 1985 à 1988. La conclusion est que le décalage entre les échelles d’équivalence persiste, même en contrôlant un nombre important de facteurs explicatifs.

Keywords

D63I32D63I32
Type
Research Article
Information
Recherches Économiques de Louvain/ Louvain Economic Review , Volume 62 , Issue 2 , 1996 , pp. 203 - 227
Copyright
Copyright © Université catholique de Louvain, Institut de recherches économiques et sociales 1996 

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Footnotes

(*)

An earlier version of this paper was presented at the Seventh Annual Conference of the European Society for Population Economics (ESPE-VII), Budapest, June 3-5, 1993. The author thanks two referees for their useful comments.

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