- Born on December 16, 1913, Erwin Rothbarth was a German economist who worked with John Maynard Keynes.
- In 1943, Rothbarth promoted his model on family spending. He also used family equivalence scales as postulated by Engel.
- However, Rothbarth used adult goods instead of food as Engel did.
- Rothbarth’s theory is used as the foundation for contemporary theory on estimating expenditures on children by determining the amount of money needed to keep an equivalent standard of expenditures on adult goods for families with different number of children compared to those families without children.
- Often called a marginal cost approach between families with and without children, it is used to determine the childrens’ portion of shared expenditures which cannot be easily observed and measured.
- It is often called Rothbarth estimator (or Rothbarth Equivalence Scale) and thought to provide a lower estimate than Engel.
- Dr. David Betson used Rothbarth method in four economic studies: Betson-Rothbarth 1990, Betson-Rothbarth 2001, Betson-Rothbarth 2006, and Betson-Rothbarth 2010.
- The study is called Rothbarth, Erwin (1943). “Appendix 4: Notes on a Method of Determining Equivalent Income for Families of Different Composition.” In Charles Madge (editor), War-Time pattern of Spending and Saving. National Institute for Economic and Social Research, Cambridge University Press.