How to Reduce the Impact of Equivalence Scales on Poverty Measurement: Evidence from Turkey

Abstract

The main aim of the paper is to contribute to the poverty measurement literature by demonstrating a method to reduce the impact of equivalence scales in poverty measurement. This is accomplished by choosing the most appropriate reference household type. The results showed that one adult household is certainly not suitable for being the reference household type. When one adult household is set as the reference, in the range of no equivalence scale and per capita equivalence scale, poverty head count ratio changes from 1 to 48 %, showing the huge effect of the equivalence scale choice. Also the analyses at household size level showed that one adult household type is not convenient to be the reference household type. On the other hand, no clear distinction could be made between central household types, but the importance of choosing a household type close to the center was demonstrated for Turkish data

Subjective equivalence scales in Eastern versus Western European countries

“…We derive the equivalence scale in the same structure as the OECD‐modified equivalence scale, which considers a single‐adult household as a reference household. While this may not be ideal (Betti et al., 2017), as single households are not the most common type, we compromise in favor of similarity, simplicity and comparability of the construction of the equivalised household income 8 . As noted earlier, in the OECD‐modified equivalence scale, the weight of the first adult is 1.0, while the weight assigned to all other adults is 0.5, and each child (persons aged 13 or younger) has a weight of 0.3.…”

“…Among others, Betti et al. (2017) demonstrate on Turkish data that the sensitivity of the poverty measures to equivalence scales could be higher when more household types deviate from the reference type. According to Betti et al., the reference household type should then be the “central” household type.…”

Regional Differences in Equivalence Scales in Turkey

“…al. [21] also deals with equivalence scales with regard to poverty measurement in Turkey, but the calculation of equivalence scales is not in the scope of this paper.…”

Nuevos cálculos de escalas de equivalencia en consumo

“…Al adentrarse en este tema se pueden encontrar casos exitosos de este tipo de medición (Atella, Menon, & Perali., 2003) (Menon & Perali, 2009) (Ballesteros, 2011;Muñoz Conde, 2014) (Vashchilko, 2015) (Betti, 1999) (Takeda, 2010) (Betti, 2016) o (Bishop 2014). En todos estos estudios se verificó que existieron diferencias significativas entre unidades de consumo con diferentes factores demográficos de edad (Takeda, 2010;Vashchilko, 2015).…”

“…Existen gran variedad de casos de la aplicación de precios de Lewbel, siendo, Ballesteros (2011) una aplicación relativamente reciente del método para Colombia. Se pueden encontrar casos de medición de la pobreza por medio de escalas de equivalencia en diferentes naciones (Vashchilko, 2015) (Betti, 2016) (Takeda, 2010). Aplicando la escala de equivalencia se busca encontrar los valores equivalentes por adulto para que sea posible comparar el nivel de bienestar de los hogares con diferente composición demográfica.…”