Equivalisation

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Equivalisation is a technique in economics in which members of a household receive different weightings. Total household income is then divided by the sum of the weightings to yield a representative income.

In the British HBAI in before housing cost figures the OECD weightings are as follows:

• 0.67 for the first adult
• 0.33 for every other adult or child above 14 years of age
• 0.2 for every child under 14 years of age

So the reference case is a childless couple. Alternative weightings can be based on formulas which decline with the number of people in a household.