Household Cost Functions and Equivalence Scales

Bernard van Praag and Nico L. van der Sar

Journal of Human Resources, 1988, vol. 23, issue 2, 193-210

Abstract: We describe a simple method to estimate household cost functions and family equivalence scales. It is an alternative to standard methods as it does not assume strong postulates about utility maximization nor any functionally specified model equations. The data requirements are extremely modest. We assume interpersonal ordinal comparability in the sense of Sen (1976) and use empirical evidence for eight European countries and the U.S. to show the feasibility of the method and the stability of its results. We also show that subjective data like those provided by income evaluation questions may be used without adopting a cardinal utility framework.

Date: 1988
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Related works:
Working Paper: HOUSEHOLD COST FUNCTIONS AND EQUIVALENCE SCALES (1986)
Working Paper: HOUSEHOLD COST FUNCTIONS AND EQUIVALENCE SCALES (1985)
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Persistent link: https://EconPapers.repec.org/RePEc:uwp:jhriss:v:23:y:1988:i:2:p:193-210

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