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Another way to measure income inequality is to use an equivalence-adjusted income estimate that takes into consideration the number of people living in the household and how these people share resources and take advantage of economies of scale. For example, the money-income-based distribution treats an income of $30,000 for a single-person household and a family household similarly, while the equivalence-adjusted income of $30,000 for a single-person household would be more than twice the equivalence-adjusted income of $30,000 for a family household with two adults and two children. The equivalence adjustment used here is based on a three-parameter scale that reflects:
The three-parameter scale is calculated in the following way:
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