Question

What is meant by the phrase " equivalent scales"?​

Answer 1

An equivalence scale is a measure of the cost of living of a household of a given size and demographic composition, relative to the cost of living of a reference house- hold (usually a single adult), when both households attain the same level of utility or standard of living.

The equivalence scale used in the OECD Income Distribution Database divides household income by the square root of the household size. This implies that, for instance, a household of four persons has needs twice as large as one composed of a single person.

Answer 2

Answer:

A household equivalence scale allows for transforming the income in an n-member household into an equivalent one-adult-member household. This is necessary for well-being comparisons across households with different number of members.