A Nonparametric Partially Identified Estimator for Equivalence Scales

Abstract

Methods for estimating equivalence scales usually rely on rather strong identifying assumptions. This paper considers a partially identified estimator for equivalence scales derived from the potential outcomes framework and using nonparametric methods for estimation, which requires only mild assumptions. Instead of point estimates, the method yields only lower and upper bounds of equivalence scales. Results of an analysis using German expenditure data show that the range implied by these bounds is rather wide, but can be reduced using additional covariates.