Distributional National Accounts: Measuring Material Living Standards and the Cost-of-living by Income Quintile

We develop a framework to measure changes in material wellbeing defined as real market consumption plus government-provided Social Transfers in Kind across income groups, consistent with the System of National Accounts. Applying this framework to eleven OECD countries, we find that Social Transfers in Kind matter for evolution of material living standards, albeit with significant differences between countries and income groups. Across countries, no clear income gradient can be found in the evolution of material well-being. However, the cost-of-living, both adjusted and unadjusted for Social Transfers in Kind, has tended to rise faster for low-income households. Significant gaps in deflators for these transfers highlight a key measurement challenge.