Empirical versus policy equivalence scales: matching estimation
Abstract
Properties of three types of equivalence scales obtained through the matching estimations are compared. The scales are derived
by estimating the effect that demographic variables have on the houshold expenditures. The types estimated include: i/
matching on common values of well-being covariates (partly normative approach), ii/ matching on simulated quivalent
expenditure minimising the deviation between the estimated and persumed value (solely empirical method), iii/matching on
covariates with imposed economy of scale on selected commodities (policy scales). Unlike many scales based on the estimates
of demand systems, those obtained by the matching estimation confirm expectations based on the economic theory.
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