Equivalisation

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Equivalisation is a technique in economics in which members of a household receive different weightings.[1] Total household income is then divided by the sum of the weightings to yield a representative income.

OECD equivalence scale[edit]

This is also called the "Oxford scale" and the "old OECD scale". Mentioned by the OECD in the 1980s for possible use in countries without an established scale.[2]

  • 1.0 to the first adult;
  • 0.7 to the second and each subsequent person aged 14 and over;
  • 0.5 to each child aged under 14.

OECD-modified scale[edit]

This is currently used by Eurostat.[2][3]

  • 1.0 to the first adult;
  • 0.5 to the second and each subsequent person aged 14 and over;
  • 0.3 to each child aged under 14.

Square root scale[edit]

This has been adopted by more recent OECD publications. The household income is divided by the square root of household size.[2]

References[edit]

  1. ^ "UK: numbers in low income - The Poverty Site". Poverty.org.uk. Retrieved 2010-07-19.
  2. ^ a b c "WHAT ARE EQUIVALENCE SCALES?". OECD.
  3. ^ http://epp.eurostat.ec.europa.eu/statistics_explained/index.php/Glossary:Equivalised_income