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Bridging the gap between model prices and unit values. Speeding up the unit value process Nordic seminar 15-16 May 2014 Lucie Nan and Herbert van Willenswaard. The issue. Unit value statistics come last in SPPI publication m odel price statistics are published at T+45

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Speeding up the unit value process nordic seminar 15 16 may 2014

Bridging the gap betweenmodel pricesand unit values

Speedingup the unit valueprocess

Nordic seminar 15-16 May 2014

Lucie Nan and Herbert van Willenswaard


The issue
The issue

  • Unit valuestatisticscome last in SPPI publication

    • model pricestatistics are published at T+45

    • unit valuepublished at T+90

    • STS turnover at T+60

    • national accounts at T+45 flash, T+90 regular

  • Some 2-digit NACE containbothmethods

  • Can we find a way to speed up the unit valueprocessso we canpublish the complete SPPI at T+45?

  • Thusenhancing the addedvalueforSTS and NA.


The cause of the issue
The cause of the issue

  • Bottleneck: moment of survey

  • Model prices are surveyedafter first month of the quarter, companies report prices in middle of the quarter

  • Unit values are surveyedaftercompletion of the quarter, companies have to report valueand units over the entirequarter


A simple idea for a solution
A simpleideafor a solution

  • The time period for which unit values are calculated should be the “longest period which is short enough so that individual variations in price within the period are regarded as unimportant” (Diewert, 1995).

    Could this mean that unit values of 1 or 2 month(s) may represent unit values of an entire quarter? Could we start the survey after the first month of the quarter?

  • For instance, CPI uses 3 weeks of scanner data for monthly unit values


Example with real data from a major it consultancy company
Examplewith real data from a major IT consultancy company

  • Time series from 2012Q1=100 to 2013Q4

  • Data of 35 specified jobs (anonymised)

  • Averageprice = totalrevenues/totalhoursworked

  • Calculatedfor 3 types of period

    • first month of quarter

    • first and second months of quarter

    • allthreemonths of quarter

  • Company index calculatedbyunweightedarithmeticaverage


Examples of indices of 4 distinct jobs service products
Examples of indices of 4 distinct jobs (service products)


Index of company unweighted arithmetic average of 35 job indices
Index of companyUnweightedarithmeticaverage of 35 job indices


The advantages of speeding up
The advantages of speeding up

  • Survey, calculation, analysis andpublication in onecycle per quarter

  • Acceleratedpublication of STS pricestatistics

  • STS turnover statistics have more timelypricedevelopment as reference

  • NA canbebased on more timelypricedevelopment data

  • A more reliable ISP publicationbecomespossible


The disadvantages of speeding up
The disadvantages of speeding up

  • Costs of process changes (investment)

  • Possiblyless accurate statistics

  • Risk of more volatility

  • Possiblysomecostsforrespondentsto change theirreporting (investment)

  • ?


Some issues that need further research 1
Some issues thatneedfurther research (1)

  • The service pricemaynotvarytoomuch in a quarter, otherwisepricedevelopmentscouldbeoverestimated or missed

  • Seasonalpatterns are a risk ifnotrestrictedto the shorter survey period

  • Does a shorterreportingperiodreduce the administrativeburden, or could the burdenincrease?


Some issues that need further research 2
Some issues thatneedfurther research (2)

  • Is thisideaapplicable in all unit value service industries?

  • Do companies have fixedmoments of billing, causingrevenuestobecollected at the end of eachquarter?


Some thoughts about administrative burden
Somethoughtsaboutadministrativeburden

  • In the Netherlands we use VAT data as input forour STS of turnover

  • Companies have to report VAT on a monthly, quarterly or yearly basis

  • Reporting frequencydepends on howmuch turnover a company generates

  • In our SPPI sample, we canidentify the companies that report VAT on a monthly basis (these are the larger companies)


Three scenarios i
Three scenariosI

We change nothing

  • Keep publishing at T+90

  • Keep quality constant

  • Keep hybrid 2-digit CPA categories

  • Keep two-track productionprocess

  • Keep beingtoo late tobeused as input forotherstatistical output


Three scenarios ii
Three scenariosII

  • We use the larger companies as a panel for the reducedperiod unit value SPPI

  • We deliver a goodqualityearlyprovisional SPPI around T+45 (T-1 becomesdefinite)

  • We collect smaller companies afterquarter is finished

  • We deliver a betterquality second provisional SPPI at T+90

    Issues: smaller companies might feel uselessand stop reporting. Productionprocess is stilldivided.


Three scenarios iii
Three scenariosIII

  • We optforthe reducedperiod unit valueSPPI andadapt the panel accordinglywherenecessary (PPS sample)

  • We delivera goodqualityprovisionalSPPI around T+45 (T-1 becomesdefinite)

    Issue: some (smaller) companies mightnotbeableto report monthly data


Three scenarios matchup
Three scenariosmatchup


How can you help
How canyou help?

  • Who has tried - or knows of attempts - to speed up the unit value SPPI in their office?

  • Ifthisdidn’tsucceed, couldyoutelluswhy?

  • Ifthisdidsucceed, couldyoutellushow?


Practically the same result at different speeds it s mind boggling
Practically the sameresult at different speeds: it’s mind boggling.