The impact of imputed rent on old-age poverty: the evidence from the Luxembourg income study

Abstract This study addresses the critical intersection of housing wealth, income assessment methodologies, and their implications for evaluating social welfare policies, to support evidence-based social policy decisions in ageing societies. It examines the role of imputed rent—an often-overlooked in-kind income component—in shaping poverty metrics among older adults. We employ the Luxembourg Income Study database to compare the situation of elderly households in 17 countries in this respect. The results obtained demonstrate that although imputed rental income is quite universal among the older population, there is a significant cross-country variation, which partly can be attributed to the methodological constraints. Nonetheless, we can conclude that imputed rental income contributes to poverty reduction. Importantly, we demonstrate that recognizing imputed rent in income calculations contributes to a more accurate assessment of poverty and social inequality, ultimately informing better policy decisions. These insights are particularly relevant in the context of shifting housing markets, growing wealth disparities, and the anticipated reductions in public pension generosity, emphasizing the need for refined income measurement methodologies in social policy design.