EQUIVALISATION - EQUIVALISATION IN POVERTY MEASURES: CAN WE DO BETTER? - A technical paper of the Social Metrics Commission

In developing this, the following should be noted: The measure uses a social norm level of needs based at the median of Total Resources Available; Testing should also be undertaken to understand the potential differences in equivalisation scales that might exist at different points below the social norm (for example around the poverty line) and the implications of these for results; and The emp. [...] When compared to results from the OECD modified equivalence scale that is currently used in the UK, the results suggested that the existing approach: • Is likely to underestimate the needs of children; • Might not differentiate adequately between the needs of children of different ages; • Might overestimate the needs of pensioner families; and • Could underestimate the needs of lone parent familie. [...] This approach has the benefit of being incredibly intuitive, and can overcome many of the issues that would otherwise exist with the creation of equivalence scales; for example it does not need to account for the relative level of income of a given set of families, and can also be certain that each basket is accounting for the discrete characteristics of families of a certain size. [...] Under this approach, the addition of another member of the family will have the same impact regardless of the individual’s characteristics, with only the number of people changing the scale. [...] However, subsequent analysis found that the original scale overstated the relative impact of additional people being added to the household, and an amended version was therefore suggested, which reduced the weighting applied to both additional adults and children.xxiv The authors of this scale noted that, although close to the average of other scales, the decision over the specifics of the scale w.