Compare methods

	Equivalence Scale Analysis	Foster-Greer-Thorbecke Index
Field	Economics	Economics
Family	Process / pipeline	Process / pipeline
Year of origin	1980	1984
Originator	Foundations in Deaton & Muellbauer (1980); cross-country sensitivity by Buhmann et al. (1988)	James Foster, Joel Greer & Erik Thorbecke
Type	Welfare-comparability adjustment	Parametric class of poverty measures
Seminal source	Deaton, A., & Muellbauer, J. (1980). Economics and Consumer Behavior. Cambridge: Cambridge University Press. ISBN: 9780521296762	Foster, J., Greer, J., & Thorbecke, E. (1984). A class of decomposable poverty measures. Econometrica, 52(3), 761–766.
Aliases	Equivalence Scales, Household Equivalence Scale, OECD Equivalence Scale, Adult Equivalent Scale	FGT Index, FGT Poverty Measures, P-alpha Poverty Index, Foster-Greer-Thorbecke Poverty Measure
Related	3	4
Summary	Equivalence scales convert a household's total income or consumption into a measure of the living standard of its members, adjusting for the fact that larger households need more resources but also share them — there are economies of scale in housing, utilities, and durables, and children typically cost less than adults. Dividing household resources by the scale yields equivalized income, the per-equivalent-adult quantity that makes welfare comparable across households of different size and composition. The theory traces to Deaton and Muellbauer's treatment in Economics and Consumer Behavior (1980), and Buhmann and colleagues' 1988 cross-country study showed that inequality and poverty rankings can be strikingly sensitive to which scale is chosen.	The Foster-Greer-Thorbecke (FGT) index is a parametric class of poverty measures introduced by James Foster, Joel Greer, and Erik Thorbecke in 1984 that became the workhorse of applied poverty analysis. A single parameter alpha tunes how much weight the measure places on the depth and distribution of poverty: alpha = 0 gives the headcount ratio (the share of people below the poverty line), alpha = 1 gives the poverty gap (the average normalized shortfall), and alpha = 2 gives poverty severity (which weights larger shortfalls more heavily). Its defining virtue is additive decomposability — total poverty is the population-weighted sum of subgroup poverty — which makes it ideal for profiling poverty across regions, sectors, and demographic groups.