Consumption in HHSA, Katri Soinne

Consumption in HHSA

Katri Soinne

Statistics Finland

Content

Demand in SNA

Intermediate consumption

Final consumption

Gross fixed capital formation

COICOP and durability classes

Calculation of household consumption expenditure

From household final consumption in core system to

classification of household consumption in HHSA

2 IATUR - Workshop on Household Satellite 29 July 2014

Basic idea: supply = demand

Y + M = IC + C + G + I + X

where

Y = output

M = imports

IC = intermediate consumption

C = private consumption

G = government consumption

I = gross fixed capital formation (investments)

X = exports


SNA: intermediate consumption

Definition: intermediate consumption consists of goods and

services consumed as inputs by a process of production

(excluding fixed assets); goods and services are either

transformed or used up by production process

Examples: raw materials, semi-finished goods, fuels and

energy, small tools, purchased services, repairs and

maintenance

Delineation with investments: duration and value

For households: intermediate consumption exists only in

actions that are included as production in SNA


SNA: final consumption

Definition: final consumption expenditure consists of

expenditure on goods and services that are used for the

direct satisfaction of individual needs or wants or the

collective needs of members of the community

Both private and government consumption

Private consumption = household consumption expenditure

+ final consumption of NPISH (=non-profit institutions

serving households)

For households everything (except dwellings) bought as

consumers is final consumption, regardless the duration or

value


SNA: gross fixed capital formation

Definition: GFCF consists (acquisitions less disposals) of

fixed assets during a given period; fixed assets are

produced assets used in production for more than one year

The use of fixed capital is included into the national

accounts calculation as “consumption of fixed capital”

(comparable to depreciation)

Delineation with intermediate consumption: duration, value

For households as consumers: only dwellings are GFCF,

everything else is final consumption in the core system


Final consumption or intermediate consumption or GFCF?


Action Final consumption

Intermediate consumption

Gross fixed capital formation

Potato farmer buys pesticides

Mr Smith buys pesticides for his roses

Restaurant buys potatoes

Mrs Smith buys potatoes for her family

Ms Williams buys a car for herself

A restaurant buys a car for the company

Company buys tickets to a concert for it’s customers

You buy tickets to the same concert (as the company) for the rest of your family

Government is building a library

Household is buying an apartment

COICOP = Classification of Individual Consumption

according to Purpose

Internationally agreed classification for household

consumption (divisions 01-12)

Coded according to hierarchy:

2digit level divisions (07 Transport)

3-digit level groups (07.1 Purchase of vehicles)

4-digit level classes (07.1.1 Motor cars (D))

5-digit level classes (so far national, in the future EU-

level classification on 5-digit level, as well)

Includes classification according to durability


Durability classes in COICOP

Four durability classes:

ND = non-durable goods (milk)

SD = semi-durable goods (shoes)

D = durable goods (car)

S = services (restaurants)

COICOP-classing (including the information about

durability) can be used in HHSA when re-dividing final

consumption into intermediate consumption, final

consumption and gross fixed capital formation


Calculation of household consumption expenditure

Main source: Household Budget Survey

Information about household consumption

Not available yearly at least in Finland

Comparisons with other sources used

Years between HBS’s

Methodological calculations

Other sources: statistics on turnover of trade, national

accounts production calculations, registrations, CPI

(consumer price index), transportation statistics etc.


Households in satellite accounts:

intermediate consumption

Goods and services used as inputs in the production

Examples

food that does not as such constitute a snack or meal

food that needs processing

household textiles (as accessories for housing services)

repairs of machines used in household production

More intermediate consumption => the output is growing

(input approach)



gross fixed capital formation

Fixed assets used in production for more than one year

Durability class D (durables)

Examples:

ovens, washing machines

cooking pans, table cutlery

More gross fixed capital formation => more consumption of

fixed capital => the output is growing (input approach)



final consumption

Goods and services as such for the direct satisfaction of

individual needs or wants

Services that are purchased as substitute for household

production

Examples

leisure

laundry services

fruits

In HHSA extended accounts includes also the gross value

added of household production minus GFCF


Division of consumption in HHSA:

Goods and services Final Inter-

mediate

GFCF

Banana

Bed

Bike

Bread

Cake mix

Car

Carpet

Contact lenses

Eggs

Insurance


Division of consumption in HHSA:

Goods and services Final Inter-

mediate

GFCF

Laptop

Pet food

Potatoes

Ready-to-eat meal

Refrigerator

Shampoo

Shoes

Towel

Train ticket

T-shirt


Consumption in HHSA and SNA

In SNA for households everything (except housing) is final

consumption

In household satellite account we divide SNA final

household consumption into intermediate consumption,

final consumption and gross fixed capital formation

Division of consumption: national way (for example bread)

or internationally agreed division?

=> Using input method intermediate consumption and

CFC (which is related to gross fixed capital formation)

are calculated into the household production


Data & Analytics

Consumption in HHSA, Katri Soinne