Subjective equivalence scales in Eastern versus Western European countries

We show that economies of scale estimated individually for each EU country differ from the officially adopted OECD‐modified scale the differences across the countries further confirm the prevailing East‐West disparity. Using the minimum income question in the 2019 EU‐Statistics on Income and Living Conditions survey, we demonstrate that applying the estimated country-specific subjective equivalence scales, instead of the uniform OECD-modified scale, results in up to a 6 pp change in the at‐risk‐of‐poverty rate. If inadequate equivalence scales are used, the equivalised income fails to inform the statistics of income poverty and prevents national social policies from being correctly targeted.