Non-monetary aspects of well-being

The focus here is on aspects of well-being that are not necessarily reflected in disposable income, especially if measured in cash terms. These aspects are important for assessing both relative and absolute levels of well-being and living standards, and for comparing these for individuals and households within particular countries, as well as in different parts of the EU. The aspects in question include access to reasonable standards of education and healthcare, to decent housing, as well as to basic services. They also include income and benefits in kind, which are not usually included in the measurement of either the extent of inequality in the distribution of income or the risk of poverty. Such goods and services as free or subsidised care for children and the elderly, housing or transport, as well as food and other goods produced for personal consumption, add to people's resources either directly or by reducing the amount that they, or their households, need to spend in order to attain a given standard of living.

The theoretical and empirical implications of leaving these kinds of goods and services out of consideration have long been recognised (Smeeding, 1977). At a theoretical level, if access to resources is really the main point of interest, then confining the definition of income to cash amounts received is not enough. What is needed is a measure of full income, including all types of income in kind - private (e.g. company car, owner-occupied housing) as well as public (e.g. publicly funded education and healthcare).

The scale of the elements of income that are not included in the definition of disposable income that is routinely used for indicators of income inequality and the risk of poverty is indicated in the following sections, where income in kind and social benefits in kind are considered separately.