Family Equivalence Scales within a Narrow and Broad Welfare Context

Abstract

Family size affects welfare in two ways. First, if family increases and income is constant, income has to be spread over more family members. This would suggest that a family increase would yield a welfare decrease. However, the fact that families have children, even if technically avoidable, points to a value of children as consumption goods. In this paper we analyze two attitude questions, viz. the Income Evaluation Question and the Cantril Question. The first may be interpreted as capturing the first effect only, while the second captures both. We derive family equivalence scales based on the two questions and we find quite different scales. Furthermore we show that both scales do not satisfy the IB-property.