The Review of Income and Wealth: "Reference Income Effects in the Determination of Equivalence Scales Using Income Satisfaction Data" (Knabe, Borah, Keldenich)

09.12.2019 -  

Neue Publikation von Andreas Knabe, Melanie Borah und Carina Keldenich:

We estimate household equivalence scales, i.e. the needs of additional adults and children relative to a single adult, using income satisfaction data from the German Socio-Economic Panel. We extend previous studies applying this approach by taking reference income into account. This allows separating needs-based from reference effects in the determination of income satisfaction. We show that this adjustment helps to overcome a bias causing an overestimation of adults' and an underestimation of children's needs-based equivalence weights. Our results indicate that controlling for income comparisons substantially increases children's equivalence weight relative to that of adults.

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Review of Income and Wealth

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