Transcript 11 September 2009

13th OECD – NBS Workshop on National
Accounts,
November 2009
Stiglitz-Sen-Fitoussi Commission
Paul Schreyer
OECD Statistics Directorate
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“Many people looked at US GDP growth in the 2000s and
said: ‘How fast you are growing – we must imitate you.’
But it was not sustainable or equitable growth. Even
before the crash, most people were worse off than they
were in 2000. It was a decade of decline for most
Americans.”
Joe Stiglitz
Financial Times 27 January 2009
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Main features
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Commission put in place Feb 2008, report presented
Sep 2009
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Main thrust: statistical systems need to re-focus from
measuring market production to measuring people’s
well-being, and sustainability
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Why important? Issue for credibility of statistical
system, quality of political debates and democracy
– Address discrepancy between perception and
official data
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– What we measure affects what we do
Main features
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Arguing for such shift does not imply minimising either
the significance of the NA (“one of the major
inventions of the last century”) or the importance of
improving existing measures of economic production
(e.g. quality changes), but recognising:
– a “tension” within the NA between a production- and welfarefocus that has always been there but is more evident today
than in the past
– a “political demand” for going beyond-GDP that was not
there in the past and that combines with a ‘grass-root’
demand by citizens and civil society
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Main features

Report covers a broad field under headings of:
i)
Classical GDP issues – material living standards
ii) Quality of life;
iii) Inter-temporal aspects (sustainability).
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Improve measures of material living
standards (‘Classical GDP Issues’)
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Needed: statistical measures that bear a closer
relation with people’s experiences
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Such measures are already available inside the NA or
can be developed consistent with the NA

NA ≠ GDP!
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5 messages
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Message #1: look at income rather than
production
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At current prices: Income = production
But real income ≠volume of production
Volume = the ‘quanity’ of goods and services
coming out of the national ‘factory door’
‘Real’ income = how much goods and services
(some of them produced abroad) can I purchase
with the income generated in the factory?
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Net rather than gross…and accounting for
international income flows
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Real net income instead of volume GDP
Net income accounts for depreciation
People receive income and transfer payments from
abroad and they also send them abroad
Important issue in developing countries when eg incomes
are re-patriated by foreign investors: value of production
may go up but national disposable income may decline
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Net national disposable income as % of
GDP
95.0
90.0
85.0
France
80.0
USA
Ireland
75.0
70.0
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Message #2: income and wealth come
together
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How well off people are is more an issue of wealth than of
income
But wealth is actually not very well measured
More needs to be done to have balance sheets of
financial and non-financial assets of households, firms
and the government
Problem: valuation of assets
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Message #2: income and wealth come
together
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Measures of capital are also the main ingredient
to track sustainability
Sustainability = capacity to go on with current
patterns of consumption and production without
jeopardising stocks of physical, environmental
and human capital
Some of these stocks are not part of assets
recognised national accounts assets
But wealth measures can be constructed
following NA principles  satellite accounts
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Message #3: emphasize the household
perspective
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A average HH income can move very differently
from GDP
Examples: Italy, Japan, Korea, Poland, Slovakia,
Germany as next graph shows
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Real household income and GDP growth,
1996-06
5.0%
4.5%
4.0%
3.5%
3.0%
2.5%
2.0%
1.5%
1.0%
0.5%
0.0%
Canada
France Germany
Italy
Japan
United United
Kingdom States
Real HH income
Finland
Volume GDP
Korea
Norway
Poland
Slovak
Republic
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…better than disposable income is
adjusted disposable income
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Adjusted disposable income corrects for (mainly) health
and education services that households receive from
government
Otherwise biased comparison between countries and/or
over time
A look at France
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‘Individual’ services provided by
government in France in 2007
(€290 bn, ≈20% of HH disposable income)
Real estate
4%
Recreational
facilities and
activities
6%
Other
8%
Education
30%
Social work
9%
Pharmaceuticals
9%
Health services
34%
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…but these services have to be well
measured
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Traditionally, outputs=inputs
Not necessarily true
Measurement is tricky but possible
Helpful: new administrative sources, for example for
health
Conclusion: let us make real adjusted disposal household
income one of the headline figures
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Message #4: more prominence to
distributional information
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Individuals cannot identify themselves with averages if
distribution is very skewed
Introduce indicators such as median income alongside
mean income
Problem: income measures for micro data ≠ income
measures for national accounts data
But comparisons can be made
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Canada
1.50
Average per capita income, SNA
1.40
Average per consumption unit, SNA
Average per consumption unit, survey
1.30
Median per consumption unit, survey
1.20
1.10
1.00
0.90
1985 1987 1989 1991 1993 1995 1997 1999 2001 2003 2005
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United States
1.50
Average per capita income, SNA
1.40
Average per consumption unit, SNA
Average per consumption unit, survey
1.30
Median per consumption unit, survey
1.20
1.10
1.00
0.90
1984 1986 1988 1990 1992 1994 1996 1998 2000 2002 2004
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Message #5: there is more economic activity
than meets the (statistical) eye
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No recognition of the production activity of services by
households (typically provided by women)
Childcare, cooking, washing, care of the elderly
All this constitutes productive activity and implicit income
Putting a monetary value to housework is difficult but can
be done for research purposes
Changes the picture of real income growth over time
(typically downwards)
Changes the picture of comparisons of real income levels
across countries
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Real income with/without household work
France
Real adjusted disposable income* per capita
Real adjusted disposable income* per capita, corrected
for household production**
United States
Finland
USD per capita
USA=100
25378
79
32110
100
21771
68
USD per capita
USA=100
35037
84
41904
100
29208
70
*For private households and non-profit institutions serving households; net of depreciation, converted with PPPs for actual individual consumption
**'Income from household production' equals the value of the estimed labour and capital inputs used by households to produce own-account services
(except owner occupied housing); converted with PPPs for actual individual consumption corrected for household production
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From material living standards to quality
of life
Economic resources are not all that matters for
human well-being: many of the determinants of human
well-being are not resources but aspects of people’s
life (“doings and beings”);
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Measurement of both objective and subjective
dimensions is important
– Subjective measures, covering evaluations, feelings,
affects ; they provide critical information about wellbeing and its determinants – often uncorrelated to
measures of material well-being
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From material living standards to quality
of life

Objective measures: health, education, personal
activities, political voice, social connections,
environmental conditions, (in)security
Task: developing indicators for these areas or
bringing existing information together

Big agenda: measuring inequalities in these
conditions (e.g. health) and assessing how these
conditions relate to each other and to income
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Pragmatic approach to inter-temporal aspects
of sustainability
Beyond current well-being (i.e. monetary
resources and non-monetary dimensions of QoL) it is
key to see whether current levels of well-being can
last over time
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– Measuring
sustainability moves us from data to modelling of
future interactions
– Indicators of sustainability should correspond to changes in
some underlying “stock” relevant for well-being (man-made,
natural human and social capital)
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Pragmatic approach to inter-temporal aspects
of sustainability
– Monetary valuation of stocks promising mainly for
economic aspects (produced assets, human
capital); for other types of capital (environmental
capital, social capital) monetary index difficult
– Because of this difficulty, measuring environmental
sustainability require physical indicators
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How was the report received?
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President Sarkozy: France will put this report on the
agenda of all international meetings and discussions that
have for objective the creation of a new economic order
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French Minister of Finances: mandated INSEE and the
OECD for concrete follow-up
Report played important role in the 3rd OECD World
Forum on Statistics, Knowledge and Policy (Busan Korea)
Report fits perfectly into the Global Project on Measuring
the Progress of Societies that is hosted by the OECD
OECD Road map prepared for follow-up work
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