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Giving more prominence to households AEG New York, 23 -25 April 2012. 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
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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
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
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?
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
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
Goal of EG DNA • EG DNA practical aim: breakdown of household income and final consumption according to NA by household group Totals, in National Currency NA totals
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
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
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
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
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
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
Understanding the drivers of differences between changes in GDP and changes in household disposable income
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)
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
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?