Nonparametric bounds on equivalence scales

Methods for estimating equivalence scales usually rely on rather strong identifying assumptions. This note considers nonparametric bounds on equivalence scales derived from the potential outcomes framework and uses nonparametric methods for estimation, which requires only mild assumptions. The method yields only lower and upper bounds of equivalence scales rather than point estimates. The results of an analysis using German expenditure data show that the range implied by these bounds is rather wide.