Bernard M. S. van Praag

The Poverty Line: Concept and Measurement

In this paper, a new approach to defining the poverty line is proposed in which family heads are asked what they consider a minimal income level for their own family. It was found that the respondents appeared to specify higher amounts, the greater their actual income and family size, and that the relationship was loglinear. For each family size there is an income level at which a respondents stated minimum income is equal to his actual income. This level is taken as a definition of the poverty line. The poverty line thus defined varies with family size.

Further evidence on the individual welfare function of income: An empirical investigatiion in The Netherlands☆☆☆

Abstract The theoretical foundation for this paper has been laid [3]. One of the theory there exposed, is that every individual can evaluate his welafre position with respect to his income level on a bounded scale. A description of this evaluation may be given by the individual welfare function of income. One of the outcomes of the theory is that under fairly general assumptions the individual welfare function will tend to a lognormal distribution function Λ(.; μ, σ). In this paper we estimated the welfare function of this income on the basis of a survey by the Consumer Union in The Netherlands. Besides yielding further evidence on the Belgian results, we handled a much finer social differentation; accordingly, we could measure the preference drift and the influence of the family size on individual welfare for much finer specified social subgroups. Finally, we compared our new results for the Dutch survey with the results of the Belgian survey on which we reported in this journal in 1971.

A new approach to the construction of family equivalence scales

Abstract The question of the money compensation which should be given to families of different sizes in order that they enjoy equal welfare levels is considered. By comparison of individual welfare functions, estimated for 3,000 individuals in the Netherlands, family welfare equivalence scales are derived. The obtained equivalence scale depends on family size and the ages of the family members. There are considerable ‘economies of scale’. The method employed may be used to derive money compensations for other situational differences. Evidence was found that people adapt their needs to situational changes. That effect was quantitatively assessed. Results are obtained and compared for various social subgroups.

The Poverty Line-A Pilot Survey in Europe

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Household Cost Functions and Equivalence Scales

In this paper we describe a simple method to estimate household cost functions and family equivalence scales. It is an alternative to standard methods as it does not assume strong postulates about utility maximization nor any functionally specified model equations. The data requirements are extremely modest. We assume interpersonal ordinal comparability in the sense of Sen (1976). Empirical evidence for eight European countries and the U.S.A. shows the feasibility of the method and the stability of its results.

Shopping at the labour market: A real tale of fiction

Abstract This paper presents results from a survey in which employers in the Netherlands reveal the way they select applicants. The survey uses descriptions of fictitious lower skilled job-seekers who do not have a job; the data are analyzed by means of logit models. The results show a strong preference for young, healthy, native (Dutch) men. Employers hardly care about qualities as education and experience, or even about the wage rate. Questions are raised about the cost-efficiency of the observed preferences.

Twelve thousand individual welfare functions: A comparison of six samples in Belgium and The Netherlands*

The paper summarizes evidence with respect to the individual welfare function of income. Moreover a number of new empirical results is presented. Data are used from six surveys in Belgium and The Netherlands. The relationships considered appear to be stable across the different samples. The implications of the results for social policy are briefly discussed.

Individual welfare functions and social reference spaces

Abstract A model of interdependent welfare functions is developed. The relationship between the parameters of an individuals welfare function and the income distribution in his Social Reference Space is established. Results based on Dutch data are presented.

Poverty in Russia

This paper is intended to shed light on the extent of poverty in the Russian Federation. We present estimates of poverty lines and poverty ratios derived from subjective questions used in a data collection for a large household panel (RUSSET). We estimate poverty using a subjective approach, where the level of the poverty line is derived using the opinion of the individual, rich or poor, on poverty. This approach differs from the objective approach to poverty, which defines poverty according to the opinion of experts. Three subjective poverty lines are presented: one the Financial Satisfaction Poverty Line, two the Leyden Poverty Line, and three the Subjective Well-Being Poverty Line. The first two poverty lines are based on subjective questions regarding income and economic welfare while the last concept focuses on satisfaction with life as a whole. The results obtained are compared with each other and with results derived using objective measures and official figures.

Collective Labor Supply of Native Dutch and Immigrant Households in the Netherlands

We estimate a collective time allocation model, where Dutch, Surinamese/Antillean and Turkish households behave as if both spouses maximize a household utility function. We assume that paid labor and housework are the endogenous choice variables and furthermore consider household production. Surinamese/Antillean and Turkish women differ from Dutch women because they value (joint) household production more in their utility function. Surinamese/Antillean and Turkish men, on the other hand, value joint household production less then Dutch men. Turkish households are the more traditional households, in the sense that the woman is more oriented on household production, while the man is oriented on paid labor. It is often believed that the bargaining power of women in more traditional households is relatively low, but our estimation results do not support this idea. In general, the wage elasticities of Dutch, Turkish and Surinamese/Antillean households are comparable. Men and women replace housework hours by paid labor if their hourly wage rate increases but do the opposite when the hourly wage rate of the partner increases.