Quotation Rapp, Severin. 2021. Asset Bias in Household Needs and Equivalence Scale Measurement. Social Policy Association Virtual Annual Conference, Virtual, Gro├čbritannien, 09.07-11.07.


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Abstract

Increasingly, the estimation of household equivalence scales relies on subjective data. This approach challenges not only traditional methodology, but also provides systematically lower estimates of household needs compared to other methods. I offer a novel take on this puzzle and argue that the failure to account for private wealth in subjective measurement is part of the explanation of why household financial needs appear to be low. Wealthy survey respondents claim to be satisfied with less income, as they can draw on their asset buffer to maintain a given living standard. Capitalising on SOEP survey data, I find that the financial needs of a household comprising five members relative to a reference household might be underestimated by up to a quarter if wealth is not accounted for. Equivalence scales are central to poverty and inequality measurement, the design of social transfer systems and many other applications. Therefore, it is crucial to account for asset ownership when drawing on estimates that rely on the subjective methodology.

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Publication's profile

Status of publication Published
Affiliation WU
Type of publication Paper presented at an academic conference or symposium
Language English
Title Asset Bias in Household Needs and Equivalence Scale Measurement
Event Social Policy Association Virtual Annual Conference
Year 2021
Date 09.07-11.07
Country United Kingdom
Location Virtual
URL http://www.social-policy.org.uk/conferences/spa-annual-conference-2021/

Associations

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Rapp, Severin (Details)
Organization
Department of Economics (Crespo Cuaresma) (Details)
Research areas (├ľSTAT Classification 'Statistik Austria')
5341 Economic policy (Details)
5371 Macroeconomics (Details)
5911 Social policy (Details)
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