This article has been reviewed according to Science X's editorial process and policies. Editors have highlighted the following attributes while ensuring the content's credibility: How much more income does a two-person household need than a person living alone? The answer is not simply twice as much.
Two people need more food and other necessities, but they can also share expenses such as housing. This means that as a household grows, the income needed to maintain the same standard of living increases—but usually by less than the number of people in the household. Measuring this difference is important for welfare policy because governments need to decide how income thresholds and benefit levels should change according to household characteristics.
The measure used to make these adjustments is known as an "equivalence scale." Yet household size alone may not tell the whole story. Two households with the same number of people may have different needs depending on whether their members are adults or children and what they consume. Taiwon Ha, an assistant professor of public administration at Pusan National University, examined these differences using Korean household data.
His study explores how household composition and consumption type influence equivalence scales, providing insights into the design of minimum-income protection and other public transfer programs. The paper was published in Asia Pacific Viewpoint. The findings showed that the empirical equivalence scales were generally smaller than the old OECD scale, a commonly used benchmark for adjusting household income.
The study also found that additional adults generally required greater weights than additional children. Education expenditures were an important exception, however, as children generated relatively greater additional needs in this category. The type of consumption also mattered.
Nonshareable goods, like food, which must largely be consumed individually, were associated with larger equivalence scales than shareable goods, such as housing. This suggests that the amount of additional income a household needs depends not only on how many people live together, but also on the kinds of goods and services they need. These findings could have direct implications for Korea's National Basic Livelihood Security system, whose standards serve as benchmarks for various welfare benefits.
Extract — continue reading at the source.
