Social benefits reflect current transfers to households in cash or in kind to provide for the needs that arise from certain events or circumstances, for example sickness, unemployment, retirement, housing, edu-cation or family circumstances that may adversely affect the well-being of the households concerned either by imposing additional demands on their resources or by reducing their incomes. Transfers are typically made by governments and NPISH, and they form a significant share of total general government expenditure and households disposable income; particularly for the lower income groups of society. They are an important factor in analyses of households' welfare and income inequality and the redistributive role of government.

The SNA breaks down Social insurance benefits into three further categories: Social Security benefits in cash; Unfunded employee social insurance benefits; and Private funded social insurance benefits. The first two are most relevant for government and the first, in particular, reflects a significant proportion of government expenditure. It includes cash payments for: sickness and invalidity benefits; children, family, dependants' and maternity allowances; unemployment benefits; pensions; and death benefits. Unfunded employee social insurance benefits include cash or in kind payments to employees for similar circumstances including payments on general medical services not related to the employee's work. Government as an employer incurs expenditures here, typically reflecting employee pensions.

Social transfers in kind reflect payments for individual goods and services such as education, health and housing, provided by government and NPISHs, to households either free or at prices that are not economically significant.

Comparability

Whilst there are significant differences between Social transfers in kind and Social benefits other than social transfers in kind vis-à-vis households' choice, they are not entirely mutually exclusive in a policy context. Governments for example can provide pensions that include a free housing component (and this component would be recorded as a social transfer in kind), rather than a pension in cash that allows the recipient to pay a market rent. Similarly some governments provide food coupons, which would be recorded as a social transfer in kind, instead of cash benefits.

This suggests that international comparisons of social benefits should focus on the totality, those in kind and in cash. Indeed comparisons of the components of social benefits other than social transfers in kind should also be attempted with some caution as the coverage of people and consequences/needs in social insurance schemes varies across countries. A further caveat concerns social benefits paid to government employees as these can be delivered through private funded rather than unfunded schemes.

Moreover, in practice not all countries record all social transfers in kind in the same way. Some countries treat the reimbursements on some individual goods and services in the secondary distribution of income account; with the reimbursed component forming part of household final consumption and not general government final consumption. Total general government expenditure, households' actual final consumption, disposable income, adjusted disposable income and saving are unaffected by these differences however.

Source

• OECD (2011), National Accounts of OECD Countries, Vol. 2011/2, OECD Publishing, http://dx.doi.org/10.1787/na_ma_dt-v2011-2-en.

Online database

• OECD (2011), "General Government Accounts: Main aggregates" , OECD National Accounts Statistics (database), http://dx.doi.org/10.1787/data-00020-en.

Further reading

• Lequiller, F. and D. Blades (2007), Understanding National Accounts, OECD Publishing, http://dx.doi.org/10.1787/9789264027657-en.
• OECD (2000), System of National Accounts, 1993 - Glossary, OECD Publishing, http://dx.doi.org/10.1787/9789264180871-en.
• UN, OECD, IMF and Eurostat (eds.) (1993), System of National Accounts 1993, United Nations, Geneva, http://unstats.un.org/unsd/sna1993.