living, if not of the whole family, at least of its adult members. Using the same example of a married couple with a child, the argument is that the child brings needs but no resources and that those needs can be met only by making cuts elsewhere in the budget. If one can find some goods that children do not consume—alcohol, tobacco, and adult clothing being the most obvious and frequently used examples—their consumption should decline when a child is added to the family. The decline is caused by the diversion of income to the child, so that if one can calculate the reduction in income that would produce that same decline, one has calculated the amount of income diverted to the child, and, thus, its cost.

The mechanics of the procedure are similar to those of the Engel method and are illustrated in Figure 3-3. Again, there is curve A for the original family and curve B for the larger family containing the child, but now they slope upwards, since expenditure on adult goods is assumed to rise with income. And it is the lower curve, curve B, that is associated with the larger family because expenditures on adult goods are cut to make room for the additional expenses associated with the child. The original family with income y0 spends a0 on adult goods, which is reduced to a1 in the presence of the child. If income is increased to y1 from y0, the original level of expenditure on adult goods is restored, and, according to Rothbarth, so are the living standards of the parents. The difference y1 – y0 is therefore the cost of the child, and the ratio of y1 to y0 is the equivalence scale value for the two family types.

FIGURE 3-3 Rothbarth method for equivalence scales. (See text for discussion.)



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