Equivalence Scales

CAN THE NUMBER OF U.S. dollars that a family receives on a regular basis accurately measure its standard of living? What if it is a single parent and one child? Or 14 children living with a grandmother, three adult sisters, and an elderly great-uncle? What if one of these families lives in Paris and the other on a family farm in Indonesia? Or Hawaii? Are their human needs the same? An equivalence scale is a tool to consider these variables.

On the surface, counting the poor would seem to be a rather simple procedure. First, a calculation of the household's needs is made. The resources are entered to see if they are sufficient to meet these needs. If they do not, it would seem logical to assert that the household is poor. But how can the household's resources be objectively observed and enumerated? The Hawaiian family is sitting on a $2.6 million property. How is that factored into the equation?

Policymakers utilize equivalence scales to establish a scientific approach to compute such matters. The methodology by which families and individuals in a variety of conditions theoretically can be quantified may assume that individuals (or families) seek to maximize their well-being (denoted as utility, U) by making purchases that are feasible given the household's income and market prices that they face. The welfare-maximiz-ing purchases of local market goods are a function of the prices of all goods, signified by (p). Total expenditures are (I), and are denoted by the scientists using them as demand functions for each of the n goods, xn = xn(p, I).

Additional factors are inserted, but in short, equivalence scales are attempts to come up with indexes or scores that can be cited to measure the level of poverty in different environments and highly varied situations. This is not an exact science. However, it is being increasingly refined and redefined because of demands for uniformly comparable numbers. Social workers need tools to gauge the level of need in widely diverse scenarios, as well as to measure program outcomes and effectiveness of remediation efforts. Policymakers, welfare analysts, statisticians, researchers, and the news media constantly use poverty data in various ways. U.S. government programs that use income criteria range from food stamps to Head Start, from legal services to Medicaid.

In the face of such a need, a respected authority, David M. Betson at the University of Notre Dame, has stated, “In the final judgment, the setting of poverty thresholds represents a subjective conjecture only bounded by our intuition and common sense.”