Equivalised income

The equivalent income  ( AEE ) is the income that each member of a household if it had grown and would live alone, the same (equivalent) standard of living would allow, as it has him within the household community. To do this, the income of the entire household is added up and then weighted on the basis of an equivalence scale. The weighting depends on the number and age of the people in the household. Mostly it is calculated as net equivalent  income (NEE). The equivalised income is a per capita income. A distinction has to be made between the NÄE and the per capita income as unweighted arithmetic average and the disposable income .

definition

As net income all apply here income from independent and dependent work , maintenance and asset and transfer income (eg housing benefit) plus rental value home ownership, net of taxes and mandatory contributions to social insurance . The monthly net equivalent income then denotes the fictitiously available amount of money per person in a month after the weighting of the persons .

The weighting (consumption equivalent compared to a one-person household) can be done in different ways. The most relevant is the weighting of the OECD , which is mostly used for international comparisons: the new and old OECD scale . On the current scale, the first adult in the household - the person with the highest contribution to household net income - is assigned a weight of 1.0, other adults and adolescents (aged 14 and over) are assigned a weight of 0.5, and each child (under 14 years) weighs 0.3 (50 percent or 30 percent of a single adult).

${\displaystyle {\text{Nettoäquivalenzeinkommen}}={\frac {\text{Summe der Nettoeinkommen}}{\text{Summe der Personengewichte}}}\ \left[{\tfrac {\text{Euro}}{\text{Kopf}}}\right]}$

Because the total weight of the people is always smaller than the total of the people, the total of the equivalised income is always greater than the total of the nominal income .

In a household with an earner with an annual income of € 40,000, an earner with € 15,000 and two school-age children (15 and 13), all four people would each have an annual equivalent income of € 55,000 ÷ 2.3 ≈ € 24,000, i.e. roughly the (income-related) standard of living of a single person with an annual income of over € 24,000.

With the help of the equivalence scale , income can be compared according to household size and composition. The reason for this is that the incomes of people who live in households of different sizes cannot be compared with one another, since economies of scale occur in larger households (e.g. through shared use of living space and household appliances).

use

The equivalised income is mainly used to calculate income distribution , income inequality and poverty .

With the net equivalent income, the standard of living for an individual citizen is generally only roughly estimated; it is usually used to determine the total welfare of a city, region or state. A welfare function is thus determined. Trivial and therefore often used functions are the arithmetic mean ( mean ) and the median ( mean ) or the welfare function according to Sen and Foster with Gini coefficient or Theil index . By using different measures of inequality , further welfare functions can be determined.

Equivalent net income is used to define relative poverty . In the EU, the median net equivalent income has been used to define the relative poverty line since 2001 as follows: People with an available income of 60% or less of this amount are considered to be at risk of poverty in relation to the total population . There is no one-size-fits-all definition of poverty. The use of a relative poverty line has been criticized in part because an even increase or decrease in the income of all strata of the population would not change it even if prices remained unchanged. The use of the median (half of the people in each case) does not reflect the income gap . The Gini coefficient developed for this reflects this.

The most widely used new OECD scale is also controversial. In particular, the assumed significantly lower needs for children are criticized as being too low, especially since in the welfare state practice lower or no savings are assumed compared with an additional adult.

The main point of criticism in relation to this criticism is that the definition of equivalised income and in particular the weights of the OECD were originally intended only as a rough, rough, quick method for an overall economic statistical calculation, i.e. for an assessment of the state of welfare as a whole, but not for the assessment of one individual household - and certainly not its actual prosperity or its concrete risk of poverty .

For a comparison between different areas, the net equivalent income has to be related to the value of money, the purchasing power ( price adjustment ). This calculation is time-consuming, and there are different regional and global comparative approaches.

National

Europe

In the official statistics of the EU ( Eurostat ), comparisons are usually made using the purchasing power standard  (PPS) in the form of a fictitious currency that converts the euro into national monetary value (the price level ).

Median net equivalent income in Europe in 2009 and 2013

country		Euro 2009	KKS 2009	Index 2009		Euro 2013	KKS 2013	Index 2013		±% euros	±% KKS	± index
EU-27/28	*	14,594	-	100.0	/	15,382	-	100.0		(5.4)	-	-
EURO-15/17		16,792	-	-	/	17,436	-	-	€	(3.8)	-	-
Belgium	*	19,313	17,491	119.9		21,483	19,775	128.6	€	11.2	13.1	8.7
Bulgaria	*	2,828	5,751	39.4		2,924	6,055	39.4		3.4	5.3	0.0
Czech Republic	*	7,295	10,104	69.2		7,694	10,649	69.2		5.5	5.4	0.0
Denmark	*	25,029	17,917	122.8		26,897	19,136	124.4		7.5	6.8	1.6
Germany	*	18,586	17,954	123.0		19,582	19,371	125.9	€	5.4	7.9	2.9
Estonia	*	6,209	8.101	55.5		6,579	8,550	55.6	€	6.0	5.5	0.1
Ireland	*	22,445	17,593	120.5		n / A	n / A	-	€	-	-	-
Greece	*	11,496	12,626	86.5		8,371	9,087	59.1	€	-27.2	-28.0	-27.4
Spain	*	12,856	13,524	92.7	/	13,524	14,238	92.6	€	(5.2)	(5.3)	(-0.1)
France	*	19,644	17,741	119.8		20,954	19,384	126.0	€	6.7	9.3	6.2
Croatia	*	n / A	n / A	-		5,078	7,258	47.2		-	-	-
Italy	*	15,637	15.198	104.1		15,733	15,342	99.7	€	0.6	0.9	-4.4
Cyprus	*	16,451	19,761	135.4		15,873	18,159	118.1	€	-3.5	-8.1	-17.3
Latvia	*	5,356	7.139	48.9		4,702	6,619	43.0	€	-12.2	-7.3	-5.9
Lithuania	*	4,715	7.149	49.0		4,698	7,352	47.8	€	-0.4	2.8	-1.2
Luxembourg	*	31,764	27,036	185.3		33,301	27,266	177.3	€	4.8	0.9	-8.0
Hungary	*	4,739	6,836	46.8		4,529	7,512	48.8		-4.4	9.9	2.0
Malta	*	10,503	13,576	93.0		12.093	15,535	101.0	€	15.1	14.4	8.0
Netherlands	*	20,156	19,227	131.7		20,839	19,226	125.0	€	3.4	-0.0	-6.7
Austria	*	20,469	19,472	133.4		22,073	20,925	136.0	€	7.8	7.5	2.6
Poland	*	5,097	7,376	50.5		5,164	9,104	59.2		1.3	23.4	8.7
Portugal	*	8,282	9,407	64.5		8,170	9,508	61.8	€	-1.4	1.1	-2.7
Romania	*	2.162	3,442	23.6		2,066	3,728	24.2		-4.4	8.3	0.6
Slovenia	*	11,864	14,410	98.7		11,852	14,286	92.9	€	-0.1	-0.9	-5.8
Slovakia	*	5,671	7,852	53.8		6,737	9,568	62.2	€	18.8	21.9	8.4
Finland	*	20,962	17,368	119.0		23,272	19,116	124.3	€	11.0	10.1	5.3
Sweden	*	21,248	18,763	128.6		26,414	20,527	133.4		24.3	9.4	4.8
United Kgr.	*	16,262	16,819	115.2	/	18,694	16,469	107.1		(15.0)	(-2.1)	(-8.1)
Iceland		22,362	21,569	147.8		21,234	19,437	126.4		-5.0	-9.9	-21.4
Norway		33,737	24,137	165.4		42,909	27,019	175.7		27.2	11.9	10.3
Switzerland		28,958	22,532	154.4		40,791	25,508	165.8		40.9	13.2	11.4

Remarks

Source: SILC / EUROSTAT

2nd column: EU members

Index: EU = 100 (the data for EU / EURO 2013 are estimated by Eurostat)

The column between 2009 and 2013 shows a break in the time series (change in design)

±% Euro / PPS: change in percent (based on 2008). The table also shows the effects of the global economic crisis from 2007 and the euro crisis ; the high increase (in euros) in Switzerland, Sweden and Norway is the devaluation against the franc and the kroner, the discrepancy between the change in euros and PPS in Great Britain is that against the pound with simultaneous economic weakness.

Germany

Equivalent
net
income in Germany in euros per year

year	Median	Average
1995	13,439	15,035
1996	14,523	16,060
1997	14,769	16,289
1998	14,393	15,918
1999	14,603	16,366
2000	15,339	17.167
2001	15,758	17,742
2003	16,500	18,492
2004	16,327	18,113
2005	15,617	17,227
2005	16,393	18,214
2006	15,663	17,283
2006	17,777	20,270
2007	17,777	20,270
2008	18.309	21,086
2009	18,586	21,223
2010	18,797	21,470
2011	19,043	21,549
2012	19,595	22,022
2013	19,582	22,471
2014	19,733	22,537
2015	20,668	23,499
2016	21,275	24,020
2017	21,920	24,780
2018	22,713	25,882

The median net equivalent income (MNÄE) always depends on the population under consideration. Usually all of Germany is considered. The regions differ significantly from one another. If you look at the federal states, the MNÄE of Baden-Württemberg is highest, 9 percent above that of the Federal Republic of Germany, and that of Mecklenburg-Western Pomerania is the lowest, 13 to 18 percent lower than the Federal German. If you take a closer look at the 39 NUTS II regions, then the MNÄE is highest in Upper Bavaria, 18 to 20 percent above that in West Germany, Mecklenburg-Western Pomerania is also the NUTS II region with the lowest MNÄE.

If you divide Germany into about 100 smaller sub-areas, then the regions Mecklenburg Lake District and Western Pomerania, both in Mecklenburg-Western Pomerania, have the lowest MNÄE, namely 20 to 24 percent below the Federal German, Munich has 25 to 27 percent above the Federal German MNÄE the highest. If you only look at the cities, Munich has the highest MNÄE and Leipzig, with 13 to 19 percent, the lowest among the federal MNÄE.

If you look at individual particular population groups, the proportion varies greatly: it is 70% for people who were unemployed for more than half the year, and less than 10% for people who worked more than half the year, one had a high level of education or owned a home.

The proportion of people in Germany who have to live on less than 60% of the median net equivalent income (MNÄE) - often referred to as "relative poverty", at-risk-of- poverty rate or poverty rate - rose steadily from 10.6% in 1998 to 15 in 2009, 16% increased. Every sixth lived in poverty, that was about 12.5 million people. In 2012 the poverty rate was just under 15%. According to scientists from the Hans Böckler Foundation in their 2016 study on the unequal distribution of income and wealth in Germany, "despite the 'good economic situation' and 'increasing employment', the situation has hardly changed."

Net equivalent income 2004 Germany

	Share in the median	per year	per month	affected population
high income	≥ 200%	€ 34,248	€ 2,854	5% to 8%
high income	≥ 150%	€ 25,686	€ 2,141	20.5%
Median	≤ 100%	€ 17,124	€ 1,427	50.0%
Lower class	≤ 70%	€ 11,986	999 €	20.5%
at risk of poverty	≤ 60%	€ 10,274	€ 856	13.0%
poor according to WHO and OECD	≤ 50%	€ 8,561	€ 713	7.7%
Subsistence level	≤ 43%	€ 7,365	€ 614
relatively poor	≤ 40%	€ 6,894	€ 571	3.5%

Equivalent net income 2017 Germany

	Share in the median	per year	per month
high income	≥ 200%	€ 43,840	€ 3,653
high income	≥ 150%	€ 32,880	€ 2,740
Median	≤ 100%	€ 21,920	€ 1,827
Lower class	≤ 70%	€ 15,344	€ 1,279
at risk of poverty	≤ 60%	€ 13,152	€ 1,096
poor according to WHO and OECD	≤ 50%	€ 10,960	913 €
relatively poor	≤ 40%	€ 8,768	€ 731

See also

• OECD scale
• EU-SILC
• Middle class
• Wealth limit

Web links

National:

• Household Income - Statistical Materials

Individual evidence

1. ↑ ^{a b} Poverty and Living Conditions - Results from LEBEN IN EUROPA for Germany 2005. (PDF) Federal Statistical Office, December 31, 2006, accessed on March 23, 2012 .  (Order number: 0010008-05900-1).
2. ^ Tilman Weigel: Caution, Statistics! Saarbrücken, 2013, ISBN 978-3-8417-7125-4 .
3. ↑ ^{a b c d e} Average and median income by age and gender . appsso.eurostat.ec.europa.eu, accessed on December 29, 2019 (the more recent KKS data are often corrected, so they differ after a few days)
4. ↑ For an interpretation of the data (for 2009) see Europe: Income . Federal Agency for Civic Education : bpb.de → Figures and facts ; Retrieved February 8, 2014 (some slightly different figures there).
5. ↑ ^{a b c d e f g h i} [http://epp.eurostat.ec.europa.eu/portal/page/portal/income_social_inclusion_living_conditions/data/database Income and living conditions - Income distribution and monetary poverty - Income distribution - Average income according to Main source of income.] (Link not available)
6. ^ Living situations in Germany - The 2nd report on poverty and wealth by the Federal Government (PDF) p. 18.
7. ↑ ^{a b} Economic calculations - LEBEN IN EUROPA (EU-SILC) - Income and living conditions in Germany and the European Union 2005 and 2006 - Fachserie 15 series 3. (PDF) Federal Statistical Office, December 12th, 2008, archived from the original on November 15th 2012 ; Retrieved March 23, 2012 . 
8. ↑ ^{a b c d e f} Community statistics on income and living conditions (EU-SILC). ( Memento from November 15, 2010 in the Internet Archive ) destatis.de
9. ↑ Economic calculations - LEBEN IN EUROPA (EU-SILC) - Income and living conditions in Germany and the European Union 2007 - Fachserie 15 Reihe 3. (PDF) Federal Statistical Office, May 25, 2011, archived from the original on November 15, 2012 ; Retrieved March 23, 2012 . 
10. ↑ Economic calculations - LEBEN IN EUROPA (EU-SILC) - Income and living conditions in Germany and the European Union 2008 - Fachserie 15 series 3. (PDF) Federal Statistical Office, December 19, 2011, archived from the original on November 15, 2012 ; Retrieved March 23, 2012 . 
11. ↑ Economic calculations - LEBEN IN EUROPA (EU-SILC) - Income and living conditions in Germany and the European Union 2009 - Special series 15 series 3. (PDF) Federal Statistical Office, December 19, 2011, archived from the original on November 15, 2012 ; Retrieved March 23, 2012 . 
12. ↑ ^{a b c} State & Society - Living Conditions, Risk of Poverty - Living Conditions, Risk of Poverty - Federal Statistical Office (Destatis). In: destatis.de. Retrieved May 14, 2016 . 
13. ↑ Florian Diekmann: Deceptive statistics on income: The poverty certificate. In: Spiegel online. March 29, 2016. Retrieved March 29, 2016 . 
14. ↑ Median of the equivalised income calculated on the basis of the new OECD scale of the population of the respective region / city in private households at the place of the main residence
15. ↑ ^{a b c} depending on the year considered, only based on 2005 to 2019
16. ↑ Social reporting - Income poverty and distribution - A.11 Medians and thresholds of income wealth, federal states (federal median, state median)
17. ↑ Social reporting - Income poverty and distribution - A.7 Medians and at-risk-of-poverty thresholds by region (federal median, state median, regional median)
18. ↑ For Bremen and Lower Saxony, microcensus adjustment layers (of which there are 132 nationwide) are considered, for all other federal states the spatial planning regions (ROR) are viewed as observation and analysis grids of the federal spatial planning based on the city and rural districts. There are 96 spatial planning regions nationwide, with the delimitation, with one exception (Bremen / Lower Saxony), running along the state borders. 2008 to 2019 only.
19. ↑ bpb: November 26, 2019 - Selected at-risk-of-poverty rates, 2017
20. ↑ ^{a b} Marcus Klöckner: Income inequality is “far higher” in Germany today than it was 20 years ago. Article about the results of the 2016 study by the Hans Böckler Foundation on the unequal distribution of income and wealth in Germany. In: Telepolis, August 8, 2016. Retrieved August 11, 2016.
21. ^ German Bundestag (ed.): Situation in Germany. The 3rd report on poverty and wealth by the federal government . June 30, 2008 ( bundestag.de (PDF)).
22. ↑ Werkstatt Ökonomie e. V. (Ed.): Is there such a thing as poverty and wealth? For the social handling of definition and method problems . Heidelberg 2002, ISBN 3-925910-04-2 .
23. ↑ DIW Berlin 2008. (PDF; 241 kB) In: DIW Berlin weekly report No. 10/2008. P. 103 , accessed January 5, 2012 .  Last number listed from 2006.
24. ^ ^{A b} Jan Goebel, Martin Gornig, Hartmut Häußermann: Polarization of incomes: The middle class is losing. (PDF; 469 kB) In: Weekly Report No. 24/2010. German Institute for Economic Research , Berlin, June 6, 2010, p. 3 , accessed on October 23, 2019 (8 pages).