The Benchmark Consumption Coverage Ratio: A Cross-Country Indicator of Income Adequacy

This study introduces the benchmark consumption coverage ratio (BCCR), a benchmark-referenced consumption coverage ratio that expresses price-adjusted median equivalised disposable income as coverage of a selected market consumption benchmark. It positions the BCCR within the broader family of income-to-benchmark adequacy ratios, while defining its narrower role as showing how far median equivalised disposable income in different countries covers an international market consumption benchmark grounded in empirically observed private consumption in a high-consumption reference economy. The empirical design uses three internally consistent specifications: a main Eurostat Price Level Index/Purchasing Power Standard (PLI/PPS) specification for 30 countries over 2017–2024, a Eurostat income specification using the Numbeo Cost-of-Living Index (COLI) to test deflator robustness on the same country sample, and an OECD income specification using Numbeo COLI to assess broad consistency across 38 countries over 2017–2023. The validation outcomes are severe material and social deprivation, inability to face unexpected financial expenses, and difficulty making ends meet, with controls for the Gini coefficient, unemployment, and social spending. The results show that higher BCCR values are consistently associated with lower deprivation and financial strain, including after socio-economic controls. Robustness checks indicate that the findings are not driven by serious multicollinearity, one influential country, or the reference-basket choice; fixed-effects models provide partial within-country robustness. The contribution of the BCCR is interpretative rather than causal: it translates comparable median income into coverage, shortfall, surplus, residual income share after benchmark coverage, and required income growth. A BCCR value of 1 denotes full coverage of the selected benchmark, not a universal normative standard.