Income-expenditure surveys typically provide incomes on the household level.
As households can differ in size and needs, a reliable assessment of
inequality in living standards, therefore, necessitates the conversion of the
original heterogeneous into an artificial quasi-homogeneous population. Ebert
and Moyes (2003) and Shorrocks (2004) theoretically explore the properties of
two alternative conversion strategies: a weighting of household equivalent
incomes by size and by needs. We use data from the Luxembourg Income Study for
examining the sensitivity of the Gini and the Theil index to the chosen
conversion strategy, and explain our results by means of an inequality
decomposition by population subgroups.