Do Adult Equivalence Scales Matter in Poverty Estimates? A Ghana Case Study

Abstract

This research estimates the sensitivity of the poverty measures in northern Ghana to the use of equivalence scales which control for economies of scale and household composition. Individual welfare estimated as per capita expenditures (PCE) and several methods of per adult equivalent expenditures (PAE) are compared using stochastic dominance and Lorenz curves at absolute poverty lines of $1.25 and $2.00 per daily capita. Results indicate that overall poverty measures are highly sensitive to the use of equivalence scales, and that these results are driven by a relatively young population and large household size in the region. Poverty measures for children and the elderly as well as for those in urban and rural areas are also sensitive to the use of equivalence scales.