**Table 12: Extreme child poverty by Household Age Composition**

||**Extremely**<br>**poor**<br>**children**<br>**(millions)**|**Children**<br>**headcount**<br>**poverty rate**<br>**(%)**|**Adults**<br>**headcount**<br>**poverty rate**<br>**(%)**|**Share of**<br>**extremely**<br>**poor**<br>**children (%)**|**Share of**<br>**sample child**<br>**population**<br>**(%)**|
|---|---|---|---|---|---|
|2 generation<br>( people aged 18-59 and<br>children0-17)|257.9|19.7|12.5|78.5|77.5|
|Elderly and children<br>(people aged >=60 and 0-17)|3.0|21.0|13.4|0.9|0.9|
|Three generation<br>(people aged >=60, 18-59, and<br>0-17)|67.1|18.8|13.0|20.4|21.1|
|Only children|0.6|7.4|.|0.2|0.5|
|Total|328.7|19.5|9.2|100.0|100.0|

Source: GMD, UNDESA, WDI, PovcalNet

# **4. Sensitivity to alternative equivalence scales**

The estimates of poverty by age group reported are based on per capita consumption, and therefore rest on the fundamental assumption that per capita consumption reflects individual economic welfare both within and across households. This assumption, while standard, has been widely questioned on three main grounds. First, it ignores potential disparities in resource allocation within the household. Since we do not have access to data from a large number of countries on consumption associated to specific household members, it is difficult to address this issue. However, failing to account for intra-household inequalities likely understates child poverty; Dunbar et al (2011) estimate that child poverty rates in Malawi would increase from 91.3% to 97.4% when unequal allocations within the household are considered. Similarly, Bargain et al (2013) find that per capita measures of consumption underestimate child poverty estimates for Côte d’Ivoire, especially for larger households, once both intra-household allocation and economies of scale are considered. Second, the use of per capita consumption ignores the relative difference in the costs of satisfying children’s and adults’ needs; specifically, food needs of children, especially younger children, are less than those of adults, although other needs of children, such as for schooling and healthcare may be higher. Finally, households with more members are able to achieve greater economies of scale on household goods such as rent, utilities, some durable goods, and other shared aspects of household activity and expenditure. Together, the latter two assumptions -- that adults and children have equal-cost relative needs and that there are no economies of scale -- have been relaxed by employing ‘equivalence scales’ that adjust household size, typically according to their member’s age and the number of total members.<sup>11</sup> These equivalence scales are commonly expressed using two key parameters: α for the relative cost of children, and θ to control for economies of scale, according to the following formula: Where mh is the number of equivalent adults in household h, nah is the number of adults in household h, and nch is the number of children in household h. The parameters α and θ can take values between zero and one; lower values of α are used to reflect children’s lower expenditure needs relative to adults; lower

> 11 Some equivalence scales also adjust for differing needs by gender and other factors such as disability.

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