To measure poverty, incomes must be equivalized across households with di erent structures.
In this paper, we use a very exible ordered response model to analyze the relationship be-
tween income, demographic structure and subjective assessments of nancial wellbeing drawn
from the 1991-2008 British Household Panel Survey. Our results suggest the existence of
large scale economies within marital/cohabiting couples, but substantial diseconomies from
the addition of children or further adults. This pattern contrasts sharply with commonly-used equivalence scales, and is consistent with explanations in terms of the capital requirements associated with additions to the core couple.