Transcript National Transfer Accounts: Goals, Accomplishments, Challenges

National Transfer Accounts:
Goals, Accomplishments,
Challenges
Andrew Mason
January 2007
Berkeley
National Transfer Accounts
Outline of Talk
► Brief
overview of the project and National
Transfer Accounts (NTA)
► Early results, issues, and difficulties






Economic Lifecycle
Reallocation Systems
Bequests
Projecting or Simulating NTA
Other Issues
Accomplishments
National Transfer Accounts
I. Overview of NTA
Per Capita Consumption and
Production
The Economic Lifecycle
500
400
Surplus
Labor
Production
300
200
Consumption
100
Deficits
0
0
10
20
30
40
Age
National Transfer Accounts
50
60
70
80
Project is Motivated by 3 Points
►
►
Economic lifecycle is a pervasive feature of all economies;
it leads to the shift of large amounts of resources from the
working ages to the dependent ages.
Reallocation systems are varied involving:
 Public and private sectors
 Investment, credit, and transfers
►
Changes in population age structure interact with the
economic lifecycle, the reallocation system, and public
policy to influence:
 economic growth,
 intergenerational equity,
 saving, wealth, and other important features of the macroeconomy.
National Transfer Accounts
Goals of the NTA Project
► Develop
a system of economic accounts that can
be used to study the macroeconomic implications
of aging.
► Estimate the accounts with historical depth for
economies with different cultures, levels of
development, economic systems and policies.
► Analyze and explain
 variation in the economic lifecycle and the reallocation
systems,
 macroeconomic effects of population aging,
 economic implications of pension, health care,
education, child subsidies, and other policy.
National Transfer Accounts
Important Features of National
Transfer Accounts
► Comprehensive
approach:
 All mechanisms for shifting resources from one
age group to another are incorporated into the
accounts.
 Both public and private institutions are
incorporated. The role of the family is
emphasized.
► NTA
is consistent with and complementary
to NIPA and GA.
National Transfer Accounts
Important Features of NTA
► NTA
consists of 3 accounts
 Flow Account measures the economic flows to and from
each age group during a calendar or fiscal year.
 Wealth Account measures the wealth associated with
each flow – assets and transfer wealth.
 Wealth Revaluation Account measures the changes in
wealth due to changes in asset prices, interest rates,
and public policy.
► Emphasis
to date and in this presentation is on the
flow account.
National Transfer Accounts
The Flow Account Identity
► Inflows
► Outflows
 Labor Income
 Asset Income
 Transfer Inflows
 Consumption
 Saving
 Transfer Outflows
Y (a )  Y (a )   (a)  C (a )  S (a )   (a )
l
a


Inflows
Outflows
C (a)  Y l (a)  Y a (a)  S (a)    (a)    (a)
Lifecycle Deficit
Asset-based Reallocations
Net Transfers
Age Reallocations
National Transfer Accounts
Table 1. A Classification of NTA Reallocations.
Asset-based Reallocations
Capital and Other
Non-Financial
Assets
Credit
Transfers
Public
Public infrastructure
Public land and subsoil minerals
Public debt
Student loans
Money
Public education
Public health care
Unfunded pension
plans
Private
Housing
Consumer durables
Factories, Farms
Private land and
sub-soil minerals
Inventories
Consumer credit
Familial support of
children and parents
Bequests
Charitable
contributions
Source: Adapted from Lee 1994.
National Transfer Accounts
II. The Economic Lifecycle.
Figure 1. Economic Lifecycle, Developing World Profile.
Consumption and Labor Income, Per
Capita
1.200
1.000
Labor Income
0.800
Consumption
0.600
0.400
0.200
0.000
0
10
20
30
40
50
60
70
80
90+
Age
Note. Values normalized on per capita labor income of persons 30-49.
Note: Mean of values for Costa Rica 2004, Indonesia 1996,
Taiwan 1977, and Thailand 1996. Source: Lee and Mason 2007.
National Transfer Accounts
Lifecycle Deficit and Surplus Ages
Country
Year
Early Age
Later Age
Duration
Indonesia
1996
29
58
29
Thailand
1996
26
61
35
Taiwan
1998
24
56
32
Japan
Span of surplus ages is about 3 decades.
1999
29
61
No apparent relationship to development.
32
United States
2000
27
59
32
Costa Rica
2004
24
57
33
National Transfer Accounts
Developing Consumption Profile: Mean, Minimum, and
Maximum. Based on Taiwan 1977, Thailand 1996,
Costa Rica 2004, and Indonesia 1996.
0.8
Consumption
0.6
0.4
Consumption profiles are relatively flat
in developing countries.
0.2
0.0
0
10
20
30
40
50
60
70
Note. Normalized on mean of labor income for 30-49-year-olds.
Source: Lee and Mason 2007.
National Transfer Accounts
80
90+
Consumption Profiles: Industrialized
vs Developing Countries.
1.200
More on
elderly
(health care)
C(a)/Yl(30-49)
1.000
US
More on
education
0.800
Japan
0.600
0.400
Range for developing
countries
0.200
0.000
0
10
National Transfer Accounts
20
30
40
50
60
70
80
90+
Developing Labor Income Profile: Mean, Minimum, and
Maximum. Based on Taiwan 1977, Thailand 1996,
Costa Rica 2004, and Indonesia 1996.
1.2
Yl(a)/Yl(30-49)
1
0.8
0.6
0.4
0.2
0
0
10
20
National Transfer Accounts
30
40
50
60
70
80
90+
Labor Income: Industrialized vs
Developing Countries.
1.4
Japan
Higher Yl in the
50-59 age group
1.2
1
Developing
0.8
US
0.6
0.4
0.2
0
0
10
20
National Transfer Accounts
30
40
50
60
70
80
90+
Challenges and Issues:
Methodological
► Consumption
 What are the best methods for estimating
private health expenditure age profiles?
 Should cost of childbearing be allocated to the
mother or to the child?
► Labor
Income
 How do we estimate and incorporate deferred
compensation?
 Should we worry about seniority-based wage
systems, w(a) .ne. vmp(a)?
National Transfer Accounts
Challenges and Issues:
Substantive
► How
does tax force influence labor income
profiles? (Refer to Gruber and Wise)
► How do we model consumption profiles?
 Life-cycle model (Lee, Mason, and Miller SJE)
 Altruism model (Mason and Lee, NUPRI)
 Social planner model (work underway)
National Transfer Accounts
Tax Force and Labor Income
Unused Capacity
0.7
0.6
0.5
0.4
Gruber
& Wise
France
0.3
NTA
0.2
0.1
Japan
US
0
0
2
4
6
Tax Force (55-69)
Note: NTA measure is 1 – Yl(55-64)/Yl(30-49).
National Transfer Accounts
8
10
Consumption by 3 generations in Taiwan:
Birth cohorts of 1915, 1945, & 1975
0.7
Children
Parents
Grandparents
C(a)/Yl(30-49)
0.6
0.5
1945
1915
0.4
1975
Note that generation length in Taiwan is 30 years;
hence, this approximates C by children, parents,
and grandparents.
0.3
0.2
0
10
20
30
40
50
Age
National Transfer Accounts
60
70
80
90
Consumption Superimposed:
Birth cohorts of 1915, 1945, & 1975
0.7
0.6
C(a)/Yl(30-49)
Matched by decline in C
by parents
and
0.5
grandparents
1945
1915
0.4
Rapid growth in C by
children (until
0.3 age 20)
After age 21
consumption of 3
generations are
virtually identical
1975
0.2
0
10
20
30
40
50
Age of 1945 cohort
National Transfer Accounts
60
70
80
90
Consumption Superimposed:
Birth cohorts of 1915 & 1945
0.7
0.6
C(a)/Yl(30-49)
Simple correlation between
0.5 grandparent
parent and
consumption is 0.95
1945
1915
0.4
Conclusion: Consumption by grandparents explained almost
entirely by current labor income of parents and by
factors common to the parent and grandparent generations.
Suggests a high degree of altruism.
0.3
0.2
0
10
20
30
40
50
60
70
80
90
Age of 1945 cohort
Note that during this period Taiwan introduced both
National Health Insurance and public pension programs.
National Transfer Accounts
III. The Age-Reallocation System
NT Flow Account, Aggregate. Taiwan, 1998 (NT$ billion), nominal
Age
Total
0-19
20-29
30-49
50-64
65+
Age Reallocations
525
1671
-13
-1500
-25
391
Asset-based reallocations
554
-21
-213
362
265
160
Asset Income
2149
4
180
1259
492
212
Less: Saving
1,595
25
393
898
227
52
-29
1692
200
-1862
-290
231
2
436
-15
-463
-77
121
-31
1256
146
-1489
-129
185
0
0
69
90
-84
-75
Transfers
Public
Private, Intervivos
Bequests
Source: Mason, Lee, Tung, Lai, and Miller, forthcoming.
National Transfer Accounts
Financing the Consumption of
Children
Figure 7. Finance of Consumption, Young Dependents
Age 0-19
Percentage of Consumption .
120
100
3.8
5.8
Work
80
56.6
60
71.7
Inter Vivos Transfers
Reallocations to children
dominated by transfers.
Familial transfers more
important in Taiwan
than in the US.
40
20
0
37.7
0.0
Public Transfers
25.1
Asset Reallocations
-1.2
-20
USA (2000)
Taiwan (1998)
Source: Mason, Lee, Tung, Lai, and Miller (forthcoming).
National Transfer Accounts
Saving
Capital-based
transformation
Social welfare
transformation
Traditional
society?
Familial
Transfers
Old-Age Reallocation Systems
National Transfer Accounts
Public
Transfers
Saving
Mixed
Strategies
50-50 familial
and saving
50-50 saving
and public
50-50 familial
and public
Familial
Transfers
Old-Age Reallocation Systems
National Transfer Accounts
Public
Transfers
Old-age Reallocation System, Selected Countries.
100
0
US elderly rely on
asset-based reallocations
and public transfers.
25
75
Public
transfers (%)
US
50
50
Asset-based
(%)
75
25
100
0
100
National Transfer Accounts
75
50
Fam ily Transfers (%)
25
0
Old-age Reallocation System, Selected Countries.
100
Thai elderly rely on
asset-based
reallocations and on
familial transfers.
0
25
75
Public
transfers (%)
50
Thailand
50
Asset-based
(%)
75
25
100
0
100
National Transfer Accounts
75
50
Fam ily Transfers (%)
25
0
Old-age Reallocation System, Selected Countries.
100
0
25
75
Public
transfers (%)
Thailand
US
50
50
Asset-based
(%)
Taiwan has a
relatively
balanced 25
support system.
Costa Rica
75
Costa Rica and
Japan rely
heavily on
public transfers;
no familial
transfers.
Taiw an
Japan
100
0
100
National Transfer Accounts
75
50
Fam ily Transfers (%)
25
0
Challenges and Issues
►
The methods for constructing detailed asset-based
reallocations have not been adequately tested:
 Public versus private asset-based reallocations.
 Capital- versus credit-based reallocations.
►
The methods for estimating bequests are underdeveloped:
 Estimates of the co-variance between mortality and wealth are
needed.
 Estimates should include bequests of public capital and debt.
►
How can our estimates of asset-based reallocations and
bequests contribute to research on saving motives, e.g.,
lifecycle model, bequest motive, etc.?
National Transfer Accounts
Figure 5a. Component of Age Reallocations
Aggregate Values, Taiwan 1998
Bequest
InterVivos Transfers
Public Transfers
150
Prime age adults are
saving much less than
their asset income.
Total Inflows
100
Reallocations ($NT Billion)
Asset Reallocation
50
0
Active saving
-50
only by
young adults.
-100
Total Outflows
-150
0
10
20
30
40
50
60
Age
Source: Mason, Lee, Tung, Lai, and Miller forthcoming.
National Transfer Accounts
70
80
90
Figure 6b. Components of Age Reallocations,
Per Capita Values, US, 2000
Bequests
Inter Vivos Transfers
Reallocations ($US
Thousands) .
Asset Reallocation
Asset income
Total Inflowsnot disimportant;
saving.
80
Saving < asset
income at all ages.
60
Public Transfers
40
20
0
-20
Total Outflows
-40
0
10
20
30
40
50
60
Age
Source: Mason, Lee, Tung, Lai, and Miller forthcoming.
National Transfer Accounts
70
80
90+
IV. Bequests
►
►
►
In the NTA system bequests refer to the transfer of assets
that arise as the older generation is succeeded by the
younger generation. In some societies (the US?) this may
coincide roughly with death, but even in the US assets may
be transferred in advance of death.
The legacy of current generations is not limited to private
wealth. In addition, we bequeath public assets and public
debt to future generations.
Estimating the amount of bequests bequeathed by each
age group and the age group to which the resources flow
must rely on rough approximations which can be refined
over time.
National Transfer Accounts
Public Bequests
► Important
debt?




issue: Who owns public assets and
Everyone?
Adults?
Beneficiaries (students own schools)?
Taxpayers?
► Simplest
approach with some intuitive appeal is to
assume that taxpayers own public assets and debt
(say in proportion to the taxes they paid in the
previous year).
► Modeling public bequests is relatively easy.
National Transfer Accounts
Private Bequests
►
►
Private assets are by assumption owned by the household
head. An issue of some importance is how the head is
defined which varies from survey to survey.
Private bequests occur under the following conditions:
 the household head dies and transfers his resources to a household
headed by a person of a different age;
 the household headship status is transferred from a person in one
age group to a person in another age group;
 two households with different aged heads merge.
►
As a practical matter measuring these events in the
aggregate will capture only the transmission of assets
across generations.
National Transfer Accounts
Complexities of Modeling Private
Bequests
► Map
from mortality of individuals to
“mortality of heads”
► Estimate the covariance between survival
and wealth. Given positive covariance,
bequests (measured in $) occur at a later
age than deaths.
► Estimate the age of the recipients. Do older
children receive a larger share of bequests?
National Transfer Accounts
V. Projecting or simulating NTA
► Projecting
flow accounts required for
 calculation of transfer wealth,
 construction of Generational Accounts,
 policy analysis.
► Methods
 Analysis often depends on simple assumptions about
key economic variables.
► US
Social Security Administration.
► Generational Accounts.
► Bommier, Lee, et al. calculations of NPV.
► Mason estimates of 1st and 2nd dividend for UNPD.
 General Equilibrium models
National Transfer Accounts
General Equilibrium Model
► Alternative
models discussed by Ron
► Importance to projection of NT Flow Account
 Demography  capital  labor income.
 Demography  consumption.
► Dividend
period C may grow more rapidly than Yl.
► As support ratio declines, C will grow more slowly than Yl.
 Demography  interest rates.
► Conclusion:
Major elements of the NT Flow
Account must change as population age structure
changes.
National Transfer Accounts
Generic Demographic Transition over
a 250-Year Period.
Annual rates of growth (%)
Growth rate of
income per effective
consumer.
1.5
1.0
Growth rate of
consumption per
effective consumer.
0.5
0.0
Growth rate of
economic
support ratio.
-0.5
-1.0
0
25
50
75
100
125
150
175
Source: Lee and Mason 2007 World Economic and Social Survey Background Paper.
National Transfer Accounts
200
225
250
Modeling Issues to Resolve
► How
do we model consumption behavior?
► How do we model international capital
flows?
► How do we model public policy? Familial
policy?
► Other?
National Transfer Accounts
VI. Some Other Issues (from the
website)
► The
incidence of consumption taxes.
► Remittance income and what population counts
should be used.
► Smoothing.
► Confidence intervals for our estimates.
► Definition of household heads.
► Defining savings as a residual category.
► Impact of assigning benefits to specific individuals
(children vs. parents)
National Transfer Accounts
VII. Accomplishments
Participating Countries
ASIA
EUROPE
LATIN AMERICA
China
India
Indonesia
Japan
Korea, S.
Philippines
Taiwan
Thailand
Austria
France
Slovenia
Sweden
Brazil
Chile
Costa Rica
Mexico
Uruguay
NORTH AMERICA
United States
National Transfer Accounts
OCEANIA
Australia
Funding
National Institute on Aging
Core support to CEDA and EWC
United Nations Population
Fund
Asia regional project supported by
NUPRI; Uruguay NTA.
Austria NTA
Swedish Research Council
Sweden NTA
NHMRC/ARC
Australia NTA
Korea Development Institute
Korea NTA
IDRC (requested)
Latin America regional project.
MacArthur Foundation
EWC Summer Seminars 2007 & 2008.
National Transfer Accounts
Dissertation Research
► Completed
 Maliki
 Nicole Mun-Sim Lai
 Gim Eul-Sik
► In
Process
 Chawla Amonthep
 Joze Sambt
 Others?
National Transfer Accounts
Dissemination
► NTA
and NBER working papers. A few published
papers.
► Papers in Arabic, English, French, Japanese,
Korean, Portuguese, Russian, and Spanish.
► IMF Finance & Development article.
► Background papers for the UN General Assembly
and the UN World Economic and Social Survey.
► Numerous academic and policy seminars.
► Media coverage (Asahi Shimbum, Die Presse, Sao
Paulo).
National Transfer Accounts
The National Transfer Accounts project is a collaborative effort of
East-West Center, Honolulu
and
Center for the Economics and
Demography of Aging,
University of California - Berkeley
Lee, Ronald (ronlee), Co-Director
Mason, Andrew (amason), Co-Director
Auerbach, Alan (auerbach)
Miller, Tim (tmiller)
Lee, Sang-Hyop (leesang)
Donehower, Gretchen (gstockma)
Ebenstein, Avi (ebenstei)
Wongkaren, Turro (turro)
National Transfer Accounts
Takayesu, Ann (takayesa)
Boe, Carl (cboe)
Comelatto, Pablo (pabloc)
Sumida, Comfort (comfort)
Schiff, Eric (eric)
Stojanovic, Diana (diana)
Langer, Ellen (erlanger)
Chawla, Amonthep (beet)
Pajaron, Marjorie Cinco (pajaron)
Taiwan
Key Institution: The Institute of Economics,
Academia Sinica, Taipei, Taiwan.
Tung, An-Chi(actung), Country Leader
Lai, Mun Sim (Nicole)(munsim)
Liu, Paul K.C.(kliu)
Andrew Mason
Japan
Key Institutions: Nihon University Population Research
Institute and the Statistics Bureau of Japan, Tokyo, Japan.
Ogawa, Naohiro(ogawa), Country Leader
Matsukura, Rikiya(matukura)
Fukui, Takehiro(jstat)
Kondo, Makoto(kondo)
Akasaka, Katsuya(akasaka)
Nemoto, Kazuro(nemoto)
Makabe, Naomi(makabe)
Sato, Ryoko(rsato)
Ogawa, Maki(mogawa)
Murai, Minako(murai)
Obayashi, Senichi(obayashi)
Suzuki, Kosuke(Suzuki)
National Transfer Accounts
Australia
Key Institution: Australia National University
Jeromey Temple, Country Leader
Brazil
Turra, Cassio(cturra), Country Leader
Lanza Queiroz, Bernardo(lanza)
Renteria, Elisenda Perez(elisenda)
Chile
Key Institution: United Nations Economic Commission for
Latin America and the Carribean, Santiago, Chile
Bravo, Jorge(jbravo2), Country Leader
China
Key Institution: China Center for Economic Research,
Beijing, China.
Ling, Li(Lingli), Country Leader
Chen, Quilin(Chen)
National Transfer Accounts
France
Wolff, Francois-Charles(wolff), Country Leader
Bommier, Antoine(bommier)
Thailand
Key Institution: Economics Department, Thammasat University.
Phananiramai, Mathana(Mathana), Country Leader
Chawla, Amonthep (Beet)(amonthep)
Inthornon, Suntichai(Suntichai)
India
Key Institution: Institute for Social and Economic Change, Bangalore
Narayana, M.R.(narayana), Country Leader
Nanak Kakwani(kakwani)
Ladusingh, L.(ladusingh)
Mexico
Key Institution: Consejo Nacional de Población
Partida, Virgilio (virgilio), Country Leader
Mejía-Guevara, Iván(ivan)
National Transfer Accounts
Indonesia
Key Institution: Lembaga Demografi, University of Indonesia, Jakarta, Indonesia.
Maliki(maliki), Country Leader
Wiyono, Nur Hadi(nhwiyono)
Nazara, Suahasil(nazara)
Chotib(chotib)
Philippines
Key Institution: Philippine Institute for Development Studies.
Racelis, Rachel H.(Rachel), Country Leader
Salas, John Michael Ian S.(Salas)
Sweden
Key Institution: Institute for Future Studies, Stockholm, Sweden.
Lindh, Thomas(lindh), Country Leader
Johansson, Mats(Mats)
Forsell, Charlotte (charlotte)
National Transfer Accounts
Uruguay
Bucheli, Marisa(marisa), Country Leader
Furtado, Magdalena(furtado)
South Korea
An, Chong-Bum (cban), Country Leader
Chun, Young-Jun (yjchun)
Lim, Byung-In (billforest)
Kim, Cheol-Hee (Kimch)
Jeon, Seung-Hoon (jsh1105)
Gim, Eul-Sik (kuspia)
Seok, Sang-Hun (good)
Kim, Jae-Ho (ksud)
National Transfer Accounts
Austria
Key Institution: Vienna Institute of Demography
Fuernkranz-Prskawetz, Alexia (alexia), Country Leader
Sambt, Joze(joze)
Costa Rica
Key Institution: CCP, Universidad de Costa Rica
Rosero-Bixby, Luis(lrosero), Country Leader
Slovenia
Sambt, Joze(joze), Country Leader
National Transfer Accounts
United States
Key Institution: Center for the Economics and Demography of Aging
Lee, Ronald(ronlee), Country Leader
Miller, Tim(tmiller)
Ebenstein, Avi(ebenstei)
Boe, Carl(cboe)
Comelatto, Pablo(pabloc)
Donehower, Gretchen(gstockma)
Schiff, Eric(eric)
Langer, Ellen(erlanger)
National Transfer Accounts
Support:
National Institutes of Health
NIA, R01-AG025488
NIA, R01-AG025247
National Transfer Accounts
The End
National Transfer Accounts