1

Giving more prominence to households

AEG AEG

New York, 23 -25 April New York, 23 -25 April 20122012

2

Introduction

Stiglitz-Sen-Fitoussi report (five recommendations on households)– 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– Broaden income measures to non-market activities

3

Plans and initiatives

Giving more prominence to the publication of household data

Distribution of income, consumption and wealth Understanding the drivers of differences between

changes in GDP and changes in household disposable income

Measuring household services produced for own final use

4

Giving more prominence to the publication of household data

5

Publication of household data

Focus usually on GDP-growth Household (adjusted) disposable income may

provide a better reflection of material well-being Possible enhancements:

– Timely compilation of quarterly and annual sector accounts on households

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

Possible issues:– Combined sector Households and NPISHs– Definition of disposable income?

6

Distribution of income, consumption and wealth

7

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

8

EG ICW

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

EG DNA

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

9

HH group_1

HH group_2

HH group_3

HH group_4

HH group_5

Wages and salaries….Social benefits received

….Current taxes paid….….Adjusted disposable income (B7)

FoodHousingHealth….….….Final Actual consumption (P4)

Saving (B8=B7-P4)Saving ratio (=B8/B7)

Total resident

population

Household type

Goal of EG DNA EG DNA practical aim: breakdown of household income and

final consumption according to NA by household group

NA totals

Totals, in National Currency

10

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

11

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

12

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

13

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

14

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 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

14

15

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

16

Understanding the drivers of differences between changes in GDP

and changes in household disposable income

17

From GDP to HH disposable income

Periods of consistent diverging developments 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.

Both in current prices and constant prices First result: conceptual paper on the framework (to

be discussed at the AEG)

18

Measuring household services produced for own final use

19

Household services produced for own final use 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

Main problems: – Valuation in combination with the sheer size of the relevant

services (replacement cost versus opportunity cost)– Delineation of the relevant services– Collection of underlying data

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

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

20

Issues for discussion Main (general) recommendations of the AEG on

the presentation/publication of household data? Main recommendations of the AEG related to the

compilation of distributional information? How does the AEG look upon the initiative to

analyze differences in changes of GDP and changes of HH disposable income?

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

Does the AEG have other suggestions? International alignment and communication?