IT’S ABOUT HOUSEHOLDS

Jennifer RibarskyHead of SectionSectoral and National AccountsOECD

Group of Experts on National Accounts MeetingGeneva, 7 -9 May 2014

Why emphasize households?

• Stiglitz, Sen, Fitoussi commission on the Measurement of Economic Performance and Social Progress– 5 out of 12 recommendations in the

report deal with household issues

• G-20 data gaps initiative– Recommendation 16: “OECD should …

link national accounts data with distributional information”

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Work stream on distribution information

• Measuring distribution of income and consumption within a national accounts framework– OECD-Eurostat Expert Group on

Disparities in National Accounts (EG-DNA)

– OECD Informal Expert Group on Distributional Information on Household Income, Consumption, and Savings (EG-DNA2)

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Work of EG-DNA (first group)

• Compared micro and macro data sources on household income, consumption, and wealth to better understand similarities and divergences between them.

• Allocation of national account totals to groups of households using a range of micro sources; derivation of disparity measures on income, consumption and saving, for a given year; with national estimates following an agreed template and methodology

• Eurostat « a-minima exercise » for EU27

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Main benefits EG-DNA

• Sharing knowledge across countries and between micro and macro experts

• A better understanding of the differences between national accounts and micro survey concepts and compilation procedures

• Compilation of experimental data and disparity measures across households groups consistent with NA estimates: – three breakdowns:

household type, main source of income, income quintiles

– based on common templates and methodology

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Adjusted disposable income by quintiles

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Relative position of the 20% richest households to the 20% poorest households

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Slovenia 2008 France 2003 Netherlands 2008

Korea 2009 New Zealand 2006-07

Italy 2008 United States 2010

Mexico 2010

Actual final consumption by quintiles

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*Difference between adjusted disposable income and actual final consumption plus the change in net equity of households in pension funds.

Savings* as a percentage of adjusted disposable income

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Aggregate gross household saving rates 1993-2012

Possible reasons for negative savings

• Economic theories of consumption– Milton Friedman’s Permanent Income Hypothesis (PIH)– Modigliani and Brumberg’s Life Cycle Hypothesis (LCH)

• Statistical issues– Impact of transfers between households– Income related to the non-observed economy– Inconsistent responses (case of France)– Imperfect quintile allocation of households for

consumption components– Imputations related to owner occupied dwellings

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Transactions and transfers between households of different quintiles

difference of saving rates before and after transfers between households

Q1 Q2 Q3 Q4 Q5

Australia -0.1% 0.1% 0.5% 0.2% -0.2%

France 2.6% 0.7% 0.4% -0.4% -1.1%

Korea 0.5% 0.7% -0.6% -0.7% 0.4%

Netherlands -1.6% 0.8% 0.5% 0.2% -0.3%

Unites States -2.2% 0.0% 0.2% 0.1% 0.0%

Impact of transfers between households on saving ratespositive values refer to higher saving rates after transfers were taken into account

OECD work using data on households

• Household dashboard– Make use of more timely institutional

sector accounts– Primary focus on quarterly data

• Drivers of differences between GDP and Household Adjusted Disposable Income

– Paper to be presented at OECD’s Working Party on National Accounts meeting in November 2014

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Household dashboard

• Dashboard on household economic resources using an indicator approach

• Possible indicators to include– Real household adjusted disposable income– Compensation of employees (and possibly mixed

income) as a share of GDP– Household income redistribution-> ratio of adjusted

disposable income to primary income– Household savings rate– Household indebtedness ratio– Unemployment rate

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Drivers of difference between GDP and HH adjusted disposable income

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95100105110115120125130135

EURO AREA

Adj.disposable income GDP

95100105110115120125130135

UNITED STATES

Adj.disposable income GDP

95100105110115120125130135

JAPAN

Adj.disposable income GDP

95100105110115120125130135

CANADA

Adj.disposable income GDP

Thank you for your attention!

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