2025 Reports

Refining Real Consumption: Accounting for In-Kind Transfers, Imputed Rents, and Preference Heterogeneities

Abe, Naohito; Inakura, Noriko

Over the past decade, expanded government in-kind transfers such as healthcare and education have influenced household welfare in many countries. To capture their effects on consumption inequalities, this study introduces an acquisition-based consumption measure that includes in-kind transfers and imputed rents, deflated using a superlative index. Using Japanese data from 2005 to 2021, we find that while conventional measures indicate an 11.2 percent decline in consumption among younger households, our index shows a 6.3 percent increase. Of the resulting 17.5 percentage-point gap, 10.7 points come from the deflator choice, while the rest arises from including in-kind transfers and imputed rents.

JEL Codes: C43, D12, D63, E01, E21.