Subjective Poverty Equivalence Scales for Euro Zone Countries

19 Pages Posted: 20 Oct 2011

See all articles by Ismael Ahamdanech-Zarco

Ismael Ahamdanech-Zarco

Instituto Nacional de Estadística (INE)

John A. Bishop

East Carolina University - Department of Economics

Andrew Grodner

East Carolina University - Department of Economics

Haiyong Liu

East Carolina University - Department of Economics

Date Written: October 18, 2011

Abstract

While the idea behind subjective equivalence scales is generally attractive, subjective scales have been plagued by problems of inconsistency. We address this problem with new European Income and Living Conditions (SILC) datasets that are much larger in size than those available to previous researchers. We estimate subjective equivalence scales for the whole Euro Zone as well as its individual constituent countries. Our subjective scales increase consistently with household size. More importantly, we find that adding the first child is more costly than adding a third adult and that the marginal cost of children declines. Comparing modified OECD scale poverty rates to our subjective poverty rates (holding the overall poverty rate constant) we find that the subjective scales ‘redistribute poverty’ away from larger to smaller households.

Keywords: poverty, equivalence scales, subjective method, eurozone

JEL Classification: I3

Suggested Citation

Ahamdanech-Zarco, Ismael and Bishop, John A. and Grodner, Andrew and Liu, Haiyong, Subjective Poverty Equivalence Scales for Euro Zone Countries (October 18, 2011). Available at SSRN: https://ssrn.com/abstract=1945959 or http://dx.doi.org/10.2139/ssrn.1945959

Ismael Ahamdanech-Zarco

Instituto Nacional de Estadística (INE) ( email )

Paseo de la Castellana 183 6ta. Planta
Madrid, Madrid 28011
Spain

John A. Bishop (Contact Author)

East Carolina University - Department of Economics ( email )

Brewster Building
Greenville, NC 27858
United States
252 328 6756 (Phone)
252 328 6743 (Fax)

Andrew Grodner

East Carolina University - Department of Economics ( email )

A423 Brewster Building
Greenville, NC 27858
United States
2523286742 (Phone)

Haiyong Liu

East Carolina University - Department of Economics ( email )

Brewster Building
Greenville, NC 27858
United States

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