One Size Does Not Fit All: Study Reveals Household Income Needs Vary More Than Welfare Rules Assume

How much more money does a two-person household actually need compared with a person living alone? The intuitive answer—twice as much—turns out to be wrong, and the reasons why are now at the center of a new study that could reshape how governments calculate welfare benefits. Two people eat more food and use more electricity than one, but they can also split the rent, share a heating bill, and cook together rather than separately. As a household grows, the income required to maintain the same standard of living rises, but almost always by less than the simple headcount would suggest. Capturing that gap between household size and household need is the job of a statistical tool called an equivalence scale, and a new analysis from Pusan National University argues that the scales most welfare systems rely on are far too blunt for the job they are asked to do.

The research, conducted by Dr. Taiwon Ha, an Assistant Professor of Public Administration at Pusan National University, examined detailed Korean household data to test how equivalence scales shift depending on who lives in a household and what that household consumes. The study was made available online on July 8, 2026, and published in the journal Asia Pacific Viewpoint. Its central conclusion is deceptively simple but potentially consequential for policy: equivalence scales should not be treated as one-size-fits-all constants, because household needs vary systematically with composition, consumption type, and the specific objective of the benefit program being designed. A scale that works reasonably well for setting a general poverty line may misallocate resources when applied to education support or housing assistance.

Equivalence scales sit quietly at the foundation of most modern welfare states. When a government decides how much income support a family of four should receive relative to a single adult, or where to draw the income eligibility line for subsidized services, it is implicitly using such a scale. The most widely recognized benchmark is the old OECD scale, which assigns a weight of 1.0 to the first adult, 0.5 to each additional adult, and 0.3 to each child, reflecting the assumption that shared living produces economies of scale. These weights encode decades of accumulated judgment, but they were never derived from a single definitive empirical exercise, and they were calibrated for particular policy contexts in particular countries. Whether they accurately describe the needs of households in a different economy—such as South Korea’s, with its distinctive patterns of private education spending and multigenerational living—is precisely the kind of question Dr. Ha’s study set out to answer empirically rather than by convention.

The empirical results challenge the standard benchmark in several directions. The estimated equivalence scales from the Korean data were generally smaller than the old OECD scale, meaning that the actual additional income households need as they grow appears to be lower than the conventional weights imply. In other words, economies of scale within households may be stronger than the standard adjustment assumes, and applying the OECD benchmark could overstate the resources required by larger families relative to smaller ones. At the same time, the study found that additional adults generally required greater weights than additional children, consistent with the observation that adults command more of the household budget through their own consumption, work-related expenses, and personal needs, while children’s costs are more concentrated in specific categories.

That last qualification turned out to be one of the study’s most striking findings. Education expenditure emerged as a major exception to the general pattern: in this category, children generated relatively greater additional needs than adults. This is particularly significant in the Korean context, where private spending on education is among the highest in the world and where families with school-age children face substantial, largely non-negotiable costs. A welfare system that treats children as uniformly cheaper to support than adults will systematically understate the burden on families whose budgets are dominated by schooling. The implication is that the correct weight for a child depends on which part of the household budget the policy is trying to protect—a single scale cannot serve both a general minimum-income calculation and an education-specific benefit.

The type of consumption mattered in a second dimension as well. The study distinguished between shareable and non-shareable goods and found that non-shareable goods, such as food, which must largely be consumed individually, were associated with larger equivalence scales than shareable goods, such as housing. The economics are straightforward: when two people move in together, they can heat one home instead of two and buy one refrigerator, but they cannot split a single meal into two adequate dinners. Because the scope for sharing varies across categories of spending, the overall equivalence scale for a household depends on the composition of its consumption basket. A household whose budget is weighted toward food and other individually consumed necessities needs proportionally more additional income than a household of the same size whose spending is dominated by shareable items.

These findings arrive at a moment when the architecture of minimum-income protection is under active scrutiny. In South Korea, the National Basic Livelihood Security system sets standards that serve as benchmarks for a wide range of welfare benefits, and its income thresholds determine who qualifies for support and at what level. The study suggests that policymakers could move toward more differentiated equivalence scales when determining eligibility and benefit amounts. Minimum-income programs, for example, might assign greater weight to adults, reflecting their larger general consumption needs, while education-related assistance could better reflect the substantial costs that children impose in that specific domain. More broadly, the research argues that the appropriate equivalence scale is not a property of the household alone but of the match between household characteristics and the objective of the benefit program—meaning that different programs can legitimately use different scales for the same family.

The methodological significance of the work lies in its demonstration of heterogeneity. Rather than estimating a single equivalence scale and reporting it as a fixed parameter, the analysis shows that empirical scales vary across household compositions and consumption categories in patterned, interpretable ways. This matters because errors in equivalence scales propagate through entire benefit systems. If a scale understates the needs of families with children in education-heavy economies, those families will be undercompensated and may fail to qualify for support they genuinely require. If a scale overstates the needs of larger households in general, resources flow toward households whose living arrangements already generate savings, diluting the targeting of limited fiscal space. Refining the scales is therefore not a technical nicety but a question of distributional fairness and fiscal efficiency simultaneously.

Dr. Ha brings an unusual combination of experience to the question. Before joining academia, he spent nearly two decades in professional roles at Korea’s Ministry of Economy and Finance, Statistics Korea, and the United Nations, and his research focuses on welfare and social policy, labor markets, economic shocks, policy evaluation, and applied microeconometrics, with particular attention to heterogeneous policy effects. That background shows in the study’s orientation: the goal is not only to estimate parameters but to provide practical evidence that can be translated into the design of a more responsive social protection system. The author declared no conflicts of interest in connection with the publication.

The study’s closing message is captured in Dr. Ha’s own summary of the work: one size does not fit all when it comes to household income needs, and the hope is that the research provides practical evidence for designing a social protection system that better reflects household differences and directs support to those who need it most. For welfare states everywhere, the lesson generalizes beyond Korea. Every country that adjusts benefits for household size is making an implicit claim about how needs scale with people, and the evidence now suggests those claims should be tested against data on what households actually consume, who lives under the same roof, and what each program is trying to achieve. Precision in these adjustments could mean the difference between a safety net that catches the families who are genuinely stretched and one that misses them while supporting households that are already managing.

Subject of Research: Equivalence scales and household income needs assessment for public welfare transfer programs

Article Title: Pusan National University study rethinks how household income needs are assessed for welfare support

Article References: Pusan National University study rethinks how household income needs are assessed for welfare support. (n.d.). Original publication

Image Credits: AI Generated

DOI: Not provided

Keywords: equivalence scales, welfare policy, household income, minimum-income protection, public transfers, Pusan National University, South Korea, consumption sharing, education expenditure, National Basic Livelihood Security, social protection, poverty measurement