Introduction to the Household Satellite Accounts, Katri Soinne

Introduction to the Household Satellite

Accounts (HHSA)

Katri Soinne

Statistics Finland

Content

SNA and the idea of satellite accounts

Production boundary: SNA vs. non-SNA - why household

production is not included inside the production boundary?

Households in SNA

Household production and the satellite

Market and non-market producers

Output vs. input method

2 IATUR - Workshop on Household Satellite 29 July 2014

The System of National Accounts...

… is a recommendation for calculating and describing all

the economic activities in the economy

… is based on the theory of economics

… includes a lot of definitions and agreements

… gives a possibility to comparisons between years and

countries

… does not describe well-being

... does not include household production (i.e. unpaid

services produced for own consumption) according to an

agreement


Two types of Satellite Accounts (SNA 2008): extra focuses or extensions


CORE SYSTEM NACE\ Sector S12 S11 S13 S15 S2 S14

A

B

C

D

E

F

G

H

I

J

K

L

M

N

O

P

Q

R

S

T

U

Extra focus

Extension

Definition of production and the production boundary

Production is “an activity carried out under the control and

responsibility of an institutional unit that uses inputs of

labour, capital and goods and services to produce outputs

of goods and services. Production does not cover purely

natural processes without any human involvement or

direction,…”

Production boundary includes all individual or collective

goods and services that are supplied to the market as well

as the own-account production of all goods for own final

consumption or gross fixed capital formation (and excludes

the own-account production of services for own final

consumption)


Why household production is not included in the

production in National Accounts?

No unambiguous price

The output is consumed at the same time and place

Would make the analysis of economic activities more

difficult

The concept of unemployment would disappear


Production or not in SNA


YES NO

A) Growing potatoes to be sold to the factory………………….

B) Growing potatoes for your own use..…………………………

C) Gathering fruits and berries in the woods……………………

D) Preserving the gathered berries............................................

E) You are eating at a restaurant……………...…………..........

F) You are preparing a meal for your family.……………………

G) You are cleaning your house…………………………...........

H) You are hiring a cleaner for your house.…………………….

I) You are cleaning the house of your mother-in-law.................

J) You are hiring a cleaner for your mother-in-law....................

K) You go for grocery shopping.................................................

Households in SNA

Definition of household (ESA2010): “an individual or a

group of individuals as consumer as well as those people

as producers of goods and non-financial services for

exclusively own final use”

Own-account production of goods (ESA2010):

Own-account construction of dwellings

Production and storage of agricultural products

Processing of agricultural products

Production of other primary products

Other kinds of processing


Household production/ Domestic work

Definition of household production (Economic Glossary):

“the creation of satisfaction using both goods purchased in

markets and the uncompensated efforts of consumers”

Non-SNA household production:

Cleaning, maintenance and repair (=housing)

Preparation and serving of meals & snacks

Care (children, adults in needs)

Clothing (including laundry and clothing care)

Voluntary work (informal and unpaid help to other

households and organizations)

So called third party criteria: “if somebody else could do it,

it is household production”


The goal is to measure the value of household production

(most of which are non-SNA actions)

Existing information in SNA: housing, output of goods for own final use, hunting, etc.

non-SNA sources: Time Use Survey, Household Budget Survey, Wage

Statistics, other sources

Challenges: value of work

definitions

valuation of services

One figure (“share of GDP”) is not easy: part of household

production is already included in GDP


Household (Production) Satellite

GDP and Household Production


GDP

Non-SNA household

production

SNA household

production

Household

production

satellite

Rest of GDP

(=GDP –

SNA

household

production)

Market vs. non-market producers

Price of sold products covers the

production costs (50% rule) =>

market output by market

producers

Counting from top to bottom -

starting with output, ending with

operating surplus/ mixed income:

output - intermediate

consumption

= value added (gross) - CFC

= value added (net) -

compensation of employees

- taxes + subsidies

= operating surplus/ mixed

income

Products are free or the price

does not cover the expenses =>

non-market output by non-market

producers

Different valuations

Counting from bottom to top:

output = sum of costs (no

operating surplus/ mixed income)

compensation of employees +

taxes - subsidies

= value added (net) + CFC

= value added (gross) +

intermediate consumption

= output


Market production – Non-market production


Output

Market output

Output for own final use

Intermediate consumption

Value added, gross

Consumption of fixed capital

Value added, net

Wages and salaries

Operating surplus/ mixed

income

100

20

55

5

40

50

10

40

5

15

Output method

Calculation like market production (includes operating

surplus)

Comparable with market output (value equal to market

prices of similar products)

Gives possibilities to measure productivity

In theory preferable method, in practice not used very

much

Data collection is very expensive

Definition of output (for example travel and transport)?

Guidelines not clear


Input method

Calculation like non-market production (does not include

operating surplus)

Comparable with non-market output

Data available via Time Use Survey => valuing unpaid

work time by a suitable wage (or wages)

Easier in practice and has been used in most of the studies

about household production

Needs also common practices and guidelines to produce

comparable results between different countries and studies


Our workshop continues…

… the time use data: what is required for household

production satellite?

… valuation of labour: whose wage? Which wage concept?

… consumption: final consumption of households divided in

intermediate consumption, final consumption and

investments for satellite

… compiling the set of accounts: the idea of sector

accounts and the calculation of extended household

accounts

… the use of results: which kind of households are

producing and what?


Data & Analytics

Introduction to the Household Satellite Accounts, Katri Soinne