Unit of analysis: The household

The unit of analysis for the DHEA is the household, defined by the OECD as “either an individual person or a group of persons who live together under the same housing arrangement and who combine to provide themselves with food and possibly other essentials of living.” The SPSD/M and SHS data are available at the household unit level which can take the form of unattached individuals or a broad range of family types consistent with the OECD household definition.

Related to this concept is the OECD recommendation to estimate distributions based on equivalized household values. This process takes into account differences in household size and composition and the resulting economies of scale for income, consumption and savings. Adjusting income, consumption and saving measures for household composition is required as the needs of a household grow with each additional member, and a larger household normally requires more economic resources to arrive at a comparable standard of living. When household income is adjusted according to an equivalence scale, the resulting equivalized income can be viewed as an indicator of the economic resources available to a standardised household. In relation to the DHEA, the Oxford-modified equivalence scale is used, which assigns a value of 1 consumption unit to the first adult, of 0.5 to each additional adult and of 0.3 to each child under 14. Further detail on equivalence scales is available in OECD Framework for Statistics on the Distribution of Household Income, Consumption and Wealth, 2013 (pages 67 to 68).