Transcript From GDP to adjusted net disposable income of households – a decomposition analysis Working Party on National Accounts 1-3 December 2010 Julien Dupont (STD)

From GDP to
adjusted net
disposable income
of households –
a decomposition
analysis
Working Party on National Accounts
1-3 December 2010
Julien Dupont (STD)
Overview
- Background
- Description of the project
- First preliminary results
- Next steps
Background
Report by the Commission for the Measurement of Economic
Performance and Societal Progress (Stiglitz, Sen, Fitoussi 2009)
- GDP fares poorly as a measure of economic well-being
- An households perspective provides different and policy relevant
information in addition to GDP
- From gross output to net output: the need to take into account
depreciation (for welfare purposes, measures of net product are
much preferred to measures of gross output even if measures of
depreciation are imperfect)
Comparison between growth in GDP volume
and growth in HH real adjusted net
disposable income (2000-08)
Growth in GDP and in HH adjusted net disposable
income show different trends
• In a number of countries, real adjusted net disposable
household income has grown quite differently from volume
GDP
• This provide potentially misleading signals
• Having a better understanding of the factors that cause
difference is essential
• The project envisaged by the OECD tackles this issue through a
decomposition analysis of the differences between growth in
GDP and in household disposable income
Decomposition of the difference between GDP and HH real
adjusted net disposable income
Whole economy
Sectors
GDP
Gross Primary incomes
Consumption of fixed capital (depreciation)
Net domestic income
Net primary incomes
Balance of primary incomes across sectors and across borders
Net national income (NNI)
Net disposable income (allocation of
primary income)
Balance of current transfers
Net national disposable income
(NNDI)
Net disposable income (secondary
income distribution)
Balance of social contribution in kind delivered and benefits received by each
sector
Adjusted net national disposable
income (ANNDI)
Adjusted net disposable income by sector
Comparison
between adjusted net disposable income and net
disposable income in Finland
Decomposition of the difference between GDP
and HH real adjusted net disposable income
• Factors driving the difference
– Consumption of fixed capital
– Distribution of primary incomes between sectors
– Relative importance of HH as producing sector
– Current transfers between HH and other sectors
– Social transfers in kind provided by government (health,
education, housing services)
– Relative price changes between consumer goods and overall
products
Comparison of price changes of private HH
consumption and price changes in GDP, Finland
Comparison between price changes of private HH
consumption and price changes in GDP, Norway
First preliminary results, Finland
Over the period 1998-2008 in Finland, growth in
GDP volume index equals 3.29% and growth in
real adjusted net disposable income equals 3.23%.
Social transfers in kind and the relative
importance of HH explain most of the difference
with offsets from the distribution of primary
incomes between sectors, current transfers
between HH and other sectors and consumption
of fixed capital.
First preliminary results, Norway
Over same period in Norway, growth in GDP
volume index equals 2.2% and growth in real
adjusted net disposable income equals 3.9%.
Relative price changes explain most of the
differences, with the relative importance of HH
and the effects of distribution of primary incomes.
Next steps
Work is on-going.
The plan is to compile a first set of estimates by the
end of March 2011 and publish results by the end of
2011
Thank you for your attention
Comments are welcome
[email protected]