Equivalence Scales

This entry provides a description of the equivalence scale, its uses, and its various forms. It also addresses the historical development of the equivalence scale, as well as the various changes that have been effected to it. The equivalence scale is a system used in measuring the cost of living of a household, considering its demography and size in comparison with the cost of living of another household (used as a reference). Generally, single adult households are used as references for equivalence scales. The household being compared with the reference household is expected to maintain a similar standard of living. In other words, a household’s equivalence scale is defined as the expenditure level of the household divided by the equivalent or similar household’s expenditure. Practically ...