Purpose - Government policy can alleviate inequities in living standards. Disabled people often qualify for government assistance which is one way that their living standard can improve, although arbitrary systems for distributing assistance are not likely to serve equity objectives. The purpose of this paper is to indicate the key variables to which government should direct attention, in order to alleviate both horizontal and vertical inequity in grants to disabled people. Design/methodology/approach - There is no literature, either theoretical or empirical, that specifically addresses this problem. This paper invokes important economic concepts associated with the nineteenth century English philosopher/economist, John Stuart Mill, as well as the 1998 Nobel Laureate in Economics, Amartya Sen. Mill's general conception of how government should behave in treating citizens was elaborated subsequently in the public finance literature on principles of taxation. These notions are about "the equal treatment of equals" and "the unequal treatment of unequals". Sen's recent discussion of the "conversion handicap" from his general framework of capabilities is highly relevant to the question addressed here. Findings - These concepts, applied with some analytical tools of algebra and geometry, show that Mill's principles can combine with Sen's into a relevant conceptual framework. The central principles and concepts for policy formation on the standard of living for disabled people are not random; they can be specified with clarity. Originality/value - This paper contributes the relevant conceptual "yardsticks" by which policy for distributing assistance to disabled people can be evaluated. Steps, towards devising better approaches to the distribution of assistance to disabled people can now be taken.