Giving more prominence to households

AEG New York, 23 -25 April 2012

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Introduction

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Stiglitz-Sen-Fitoussi report (five recommendations on households)

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When evaluating material well-being, look at income and consumptions rather than production

– – –

Emphasize the household perspective Consider income and consumption jointly with wealth Give more prominence to the distribution of income, consumption and wealth

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Broaden income measures to non-market activities

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Plans and initiatives

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Giving more prominence to the publication of household data

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Distribution of income, consumption and wealth

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Understanding the drivers of differences between changes in GDP and changes in household disposable income

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Measuring household services produced for own final use

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Giving more prominence to the publication of household data

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Publication of household data

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Focus usually on GDP-growth

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Household (adjusted) disposable income may provide a better reflection of material well-being

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Possible enhancements:

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Timely compilation of quarterly and annual sector accounts on households

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Put more emphasis on households when publishing NA data => timely press release

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Possible issues:

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Combined sector Households and NPISHs Definition of disposable income?

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Distribution of income, consumption and wealth

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Early 2011 - Two Expert Groups on households economic resources were established following the Stiglitz-Sen-Fitoussi recommendations  OECD Expert Group on Micro Statistics on Income, Consumption and Wealth (EG ICW), aiming at: – Pursuing methodological work to develop standards and guidelines for measuring household wealth – Proposing a framework for joint analysis of micro data on households income, consumption and wealth  OECD-Eurostat Expert Group on Disparities in a National Accounts Framework (EG DNA), aiming at: – Using existing micro sources to produce indicators of disparities by group of households consistent with SNA totals – feasibility study 7 7

EG ICW EG DNA

    Membership: 17 NSOs, UNECE, Eurostat, ECB, LIS, country experts, OECD (secretariat) Chair: Mr Bob McColl (AUS) Financial/In-Kind support: AUS, CH, IT 2 meetings: March and December 2011     Membership: 25 NSOs, ECB, LIS, OECD and Eurostat (both secretariat) Chair: Mr Wim Van Nunspeet (NL) Financial/In-Kind support: FR 2 meetings: March and December 2011 8

Goal of EG DNA

 EG DNA practical aim: breakdown of household income and final consumption according to NA by household group

Household type

HH group_1 HH group_2 HH group_3 HH group_4 HH group_5

Total resident population

Totals, in National Currency

Wages and salaries ….

Social benefits received NA totals ….

Current taxes paid ….

….

Adjusted disposable income (B7)

Food Housing Health ….

….

….

Final Actual consumption (P4) Saving (B8=B7-P4) Saving ratio (=B8/B7)

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Goal of EG DNA (cont.)

 Produce distributional information

consistent

with macro-totals – Average household (adjusted) disposable income, final consumption and saving by HH group – Stucture of households disposable income by HH group 10

Goal of EG DNA (cont.)

Household groups to be dinstinguished  Household composition and age of each adult – Single, > 65 years, without children – Single, < 65 years, without children – Single, with children – Two adults, < 65 years, without children – Two adults, one adult . 65 years, without children – Two adults, with children – Other  Equivalised income quintiles 11

Goal of EG DNA (cont.)

Household groups to be dinstinguished  Main source of income – Owners of unincorporated enterprises with paid employees – Owners of unincorporated enterprises without paid employees – Employees – Pensioners – Recipient of transfer income (other than pensions) and property income 12

Main issues

Gaps between micro and macro measures:    Differences in scope: – Macro: half EG DNA countries include NPISHs – Micro: most micro sources exclude collective households Differences in definition of income: – Imputed rents owner-occupied dwellings – Social transfers in kind – Property income attributed to insurance policy holders – Fisim Measurement issues: – Adjustment for underground economy – Interest and dividends received 13

Progress and future work

EG DNA: a work in two main steps 

Step 1:

Taking stock of information on household income, consumption and wealth; description and comparison of micro and macro sources

From March to December 2011

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Step 2

: • Breakdown of households according to an agreed methodology • Proposal for new indicators on income, consumption and saving disparities

From November 2011 to December 2012

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Progress and future work (cont.)

End February: agreement on common template for step 2 1-3 August (Boston): third EG DNA meeting Discussion of the first national results according to common template 5-11 August (Boston): IARIW conference Paper on micro-macro comparisons End of 2012: final report of the Expert Group 15 15

Understanding the drivers of differences between changes in GDP and changes in household disposable income

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From GDP to HH disposable income

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Periods of consistent diverging developments

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Research project into the analysis of main drivers: (re)distribution of income between domestic sectors: labour/capital shares, the size of the government, role of rents and corporate profits, etc.

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Both in current prices and constant prices

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First result: conceptual paper on the framework (to be discussed at the AEG)

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Measuring household services produced for own final use

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Household services produced for own final use

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Services produced by households for own final use excluded from the SNA (except dwelling services), although they share many of the characteristics of the same kind of market services

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Main problems:

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Valuation in combination with the sheer size of the relevant services (replacement cost versus opportunity cost)

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Delineation of the relevant services Collection of underlying data

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Issues in relation to (material) well-being and international comparability

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Consensus: Keep on excluding them from the core set of national accounts

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Issues for discussion

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Main (general) recommendations of the AEG on the presentation/publication of household data?

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Main recommendations of the AEG related to the compilation of distributional information?

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How does the AEG look upon the initiative to analyze differences in changes of GDP and changes of HH disposable income?

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What is the advice of the AEG in relation to non market services of households?

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Does the AEG have other suggestions?

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International alignment and communication?

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