Transcript Quarterly national accounts and seasonal adjustment

Introduction to the SNA, advanced
Lesson 4
Household accounts
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Background
• The 2008 SNA defines a household as a group of persons who
share the same living accommodation, who pool some, or all,
of their income and wealth and who consume certain types of
goods and services collectively, particularly housing and food
A household is not established to produce goods and/or
services, which is the function of units in other institutional
sectors. However, neither does it preclude households from
engaging in production (as unincorporated enterprises)
• In practice, the accounts of the household sector cover both
the production of goods and services by unincorporated
enterprises and the uses of income arising from this
production and from other sources
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Institutional households
• The majority of persons live in individual households but
persons living in an institution are classified as part of the
household sector even if they have no (or only a little)
independence in economic matters
– those living in such institutions must be staying there long
term
– persons serving a short prison sentence or who are
temporarily in hospital remain part of their normal
household
• The definition of residence is based on the location of the
household rather than the country in which a person works
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Unincorporated enterprises
• Unincorporated enterprises are an important component of
the household sector in most countries
• The 2008 SNA defines unincorporated enterprises in terms of
what they are not: An unincorporated enterprise represents
the production activity of a government unit, NPISH or
household that cannot be treated as the production activity of
a quasi-corporation
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Unincorporated enterprises
• To understand this definition it is necessary to know what a
quasi-corporation is
• The SNA defines a resident quasi-corporation as an
unincorporated enterprise owned by a resident institutional
unit that has sufficient information to compile a complete set
of accounts and is operated as if it were a separate
corporation and whose de facto relationship to its owner is
that of a corporation to its shareholders
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Household final consumption
expenditure(HFCE)
• The 2008 SNA defines HFCE as the expenditure, including
expenditure whose value must be estimated indirectly,
incurred by resident households on individual consumption
goods and services, including those sold at prices that are not
economically significant and including consumption goods
and services acquired abroad
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Household final consumption expenditure
(HFCE)
• HFCE is almost always the largest single component of
expenditure on GDP
– it typically contributes 60% or more of GDP and can be up
to 90% in some special cases
• The composition of HFCE and GDP can vary quite markedly
from one country to another as can the relationship between
them
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Classifications
• Households can be considered from two perspectives, either
as producers or as consumers
• Classifying households depends on which perspective the
analyst is interested in examining
– households can be classified on the basis of the type of
household making the expenditure
– household expenditure can be classified according to the
type of expenditure
• The type of household classification is based on the major
income source for the household as a whole
• The classification used for household expenditure is the
Classification of individual consumption by purpose (COICOP)
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Classifications – household sector
• The SNA identifies four sub-sectors of the household sector,
based on the predominant type of income received by the
household as a whole
• The sub-sectors are:
o Employers
o Own account workers
o Employees
o Recipients of property and transfer income
– Recipients of property income
– Recipients of pensions
– Recipients of other transfers
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Classifications – COICOP
The COICOP has 14 top level categories:
1. Food and non-alcoholic beverages
2. Alcoholic beverages, tobacco and narcotics
3. Clothing and footwear
4. Housing, water, electricity, gas and other fuels
5. Furnishings, household equipment and routine household
maintenance
6. Health
7. Transport
8. Communication
9. Recreation and culture
10.Education
11.Restaurants and hotels
12.Miscellaneous goods and services
13.Individual consumption expenditure of NPISHs
14.Individual consumption expenditure of general government
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Household sector accounts
• The accounts for the household sector tend to be of
significant interest to analysts
– the details of most interest are the sources of households’
income, the taxes and social contributions they pay out,
the amounts they spend on consumption (i.e. HFCE) and
their saving (the amount left over from household
disposable income after expenditure on consumption)
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Household sector accounts
• The major sources of household income are mixed income
from unincorporated enterprises, compensation of employees
from their employment as wage and salary earners, property
income (interest, dividends etc), remittances from family
members abroad and social benefits
• The major expenses incurred by households that reduce their
disposable income are taxes on income and wealth and social
contributions
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Special case – Remittances from abroad
• An important component of household income in some
countries is the transfer of remittances by family members
from abroad
• The concept of residence is important in determining the
ways in which such remittances should be treated
– border, seasonal, and other short-term (less than one year) workers
are not resident in the economy where they work, and so their gross
income from employment is recorded as compensation of employees
of the country in which they live
– remittances include only those transfers from abroad made by workers
who are residents of the economy in which they are employed
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Special case – HFCE on health services
• Health products and services can be purchased in four ways:
– households purchase and pay for them in full
– households purchase private insurance and the insurance company
reimburses the purchaser or the provider of the products
– they are purchased and paid for in full by government, for distribution
to households
– they are purchased and paid for partly by households and partly by
government
• From a 2008 SNA point of view, it is necessary to identify who
is consuming the good or service as well as who is paying for it
– this is the basis for the measure of Actual final consumption, which is
very important for the ICP
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Special case - Net expenditures abroad
• Conceptually, household final consumption expenditure
(HFCE) refers to the expenditure incurred by resident
households, whether that expenditure is incurred within the
economic territory or abroad
• HFCE can be calculated by estimating the total expenditure by
all households, whether resident or not, in the economic
territory and then adjusting this figure by adding expenditures
by residents abroad and subtracting expenditures by nonresidents in the economic territory
– the adjustment generally appears in a country’s accounts as a single
line item
– however, this is a practical adjustment item rather than a conceptual
item and so it is not an aggregate defined in the 2008 SNA
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Special case - Net expenditures abroad (continued)
• Whether net expenditures abroad needs to be calculated as
part of HFCE depends on the data sources (e.g. a survey of
retailers compared with a household expenditure survey)
• There are 4 potential methods of estimating HFCE
– as a residual between production-based GDP and the government,
gross capital formation and net international trade expenditure
components, which is not a desirable method
– using data from a household expenditure survey (HES), which is the
preferred method
– using data from a survey of retailers
– using econometric techniques based on relationships between
national accounts data items, which is also not a recommended
approach
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Net expenditures abroad
Household expenditure
survey (HES)
Scenario 1
Scenario 2
900
800
Retail survey
Imputed expenditures (e.g.
owner-occupied dwellings)
840
200
Purchases by residents
abroad
200
200
100
100
Purchases by non-residents
in domestic territory
HFCE
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Scenario 3
-40
1100
1100
1100
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Effects of net expenditures abroad on GDP
HES
Scenario 1
Scenario 2
900
800
Retail survey
Imputed expenditures
Scenario 3
840
200
Net expenditures abroad
200
200
100
60
HFCE
1100
1100
1100
Other final demand items
600
600
600
Purchases by non-residents in
domestic territory (exports)
40
40
40
Other exports
250
250
250
Purchases by residents
abroad (imports)
–100
–100
–100
Other imports
–350
–350
–350
GDP
1540
1540
1540
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References
• International Transactions in Remittances: Guide for
Compilers and Users
• System of National Accounts, 2008 (Chapter 24 describes the
Household sector in detail)
• COICOP
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