Benefits in kind

At an empirical level, it is clear that omitting social benefits in kind from the analysis of inequality and poverty, as is standard practice, introduces a serious distortion when assessing income distribution and the risk of poverty, especially when drawing comparisons across countries.

This can be demonstrated by taking the case of two countries, A and B - or, broadly, the EU and the US. The former provides comprehensive access to tax-funded, high-quality social services and healthcare, free of charge at the point of use. The latter entrusts provision of these largely to the market, which means that people, even those on low incomes, have to pay for healthcare (or for health insurance) out of their own pocket - or go without vital medical care. The distribution of income and, in particular, the situation of those on low incomes cannot be meaningfully compared without taking account of the fact that those at the bottom end of the income scale in country A can rely on publicly funded healthcare whenever they fall ill or have an accident, whereas those in country B cannot and have to spend the same amount on this for a given course of treatment as someone at the top of the income scale.