Measurement Issues: Equivalence Scales, Accounting Framework, and Reference Unit

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Measurement Issues Equivalence Scales,
Accounting Framework, and Reference Unit

• Eva Sierminska, LWS
• Tim Smeeding, LIS and LWS
• Prepared for the LWS Workshop Construction and
  Usage of Comparable Microdata on Wealth The LWS
• Perugia, Italy 27-29 January 2005

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I. Introduction

• An Issue You Cannot Avoid (No Choice is a
  Choice!)
• But Motivation / Preferences for Asset Sharing
  are NOT Specified!
• Economies and Diseconomies of Scale are Often
  Unclear
• Goal of Paper

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II. Related Issues

• Accounting Frame
• Reference Unit
• Wealth Transfer Issues

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III. The Literature

• Ignorance (Unit is Household/Family, Whatever Is
  In Data, Full Stop)
• Simple Scales
• Per Capita
• Other Scales
• Summary Measures for Simple Scales
• SE Where E Varies from O to 1 and S Size
• Income and Wealth Studies
• Multiperiod Studies

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IV. Stylized Approaches Couples and Sharing Rules

• Three Choices for Aging Couples
• Equal, Simple (per capita)
• Equal Per Life Year
• Long Term Care Needs for Survivor
• Sensitivities (coming)

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V. Experiments

• 2001 SCF Base
• Results and Sensitivities
• No Top/Bottom Codes on Values (Table 2)
• Top/Bottom Codes on Values (Table 3)
• Assumptions Matter

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VI. Conclusions

• Ownership Matters
• Scales Matter
• Sensitivity Tests Should be Demanded
• Lots More Work to Do!

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