This paper discusses the problems encountered in constructing equivalence scales of the relative incomes required to enable families of different sizes or in different circumstances to enjoy the same standard of living. Theoretical problems and limitations of various methods are discussed, and examples of empirical results are presented.

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The usual form of retail price index implicitly gives each household a weight proportional to its total expenditure. An index of this form is appropriate, e.g, for deflating the total wage-bill. But the retail price index is more frequently used as a measure of price changes applying on average to a group of families or a class of wage-earners. For such purposes, it is appropriate to estimate the average change by using"democratic" weights, i.e. the same weight for every household, or weights proportional to equivalence scale values to reflect the needs of different-sized families.

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