Equivalence Scales, Poverty Lines and Subjective Data in Switzerland

Abstract

The estimation of equivalence scales is an important aspect of any poverty or inequality analysis. Most of the research and policy recommendations rely on so called expert scales. Some of them are used in many countries, like the OECD scale. In Switzerland, recommendations of the CSIAS, the main body in charge of social norms, are followed by academics, as well as practitioners. Yet, the use of such equivalence scales should be validated by statistical results on the cost of children. To the author knowledge, all available studies on equivalence scales in Switzerland are based on demand behavior, a method with its own merits and shortcomings. We claim that subjective estimators may overcome the difficulties implied by traditional estimation of equivalence scales. Our results seem to indicate that the expert scales are too steep. However, our results are driven by the choice of the research instrument.