Engel Scales for Australia, the Philippines and Thailand: A Comparative Analysis

Abstract

AbstractThe purpose of this study is to explore the question of how similar or how different are equivalence scales of selected countries in the Asia‐Pacific region. In particular, the article investigates whether equivalence scales for Australia, the Philippines and Thailand are comparable. That the Philippines and Thailand are two countries which are strikingly similar in their levels of socioeconomic development suggests the possibility that the relative income needs of households of different sizes in these countries are similar. In contrast, Australia is seen as an industrialised nation unlikely to have scales similar to the two other countries.The comparability problem is addressed via the widely used Engel estimation methodology applied to similarly selected samples and a common model specification. It is found that the level of agreement between the country‐specific scales is highly dependent on what ‘basket of necessities’ is used as an indicator of welfare. An interesting outcome that may well be of useful empirical significance is that with necessities defined to include food, clothing, and housing (and possibly, medical care as well), the equivalence scales for the Philippines, Thailand and Australia are more or less invariant; no such regularity exists if the definition of necessities is confined to food alone.