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Inequalities between households in the national accounts: Breakdown of household accounts

This research project aims to break down household accounts by categories using surveys, providing insights into income, consumption, and savings rates. It explores the disparities between households and reconciles macroeconomic figures with public perception.

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Inequalities between households in the national accounts: Breakdown of household accounts

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  1. Inequalities between households in the national accounts: Breakdown of household accounts Maryse FESSEAU France – Insee National Accounts Department

  2. Reconciling macro-economic figures and public’s perception • Moati P., Rochefort R. « measuring purchasing power », Conseil d’Analyse Economique – Report to PM - 2008 • Quinet A. «  measuring households’ purchasing power  », Report to Minister of Finance - 2008 • « Stiglitz » commission on the « measurement  of economic performance and social progress » • recommandation : breaking down macro-economic figures to take into account disparities between households • Beginning of the project : mid-2007 First published results : mid-2009

  3. Two different worlds : micro and macro data • Income and consumption : two types of information available • Building a bridge between these two approaches to break down households’ account by household categories • Households’ account • (MACRO SOURCE) • « mirror » construction • exhaustiveness • harmonised framework • Households’ surveys • (MICRO SOURCE) • direct information • specific surveys • individual information

  4. Presentation in three parts : 1. Breakdown of household accounts using surveys : scope, classification and methodology 2. Results published : disposable income, consumption expenditure and savings rate by household categories 3. A new step : adjusted disposable income and actual consumption by household categories

  5. Part 1: Breakdown of householdaccountsusingsurveys : scope, classification and methodology

  6. Breakdown of ordinary household accounts for the year 2003 using five surveys (1/3) • The framework of analyses : national accounts, 2003 • A breakdown using five surveys, for ordinary households – mainland France • 4 classification variables : standard of living, household composition, employment status or age of the head of the household Source: National accounts 2003 – Base 2000, Insee

  7. Breakdown of ordinary household accounts for the year 2003 using five surveys (2/3) • Comparison of estimates coming from different data sources • Some imputations on micro data (imputed rents, financial revenues, public education expenditure,…) Source: Insee, National accounts 2003, SILC 2004, Taxincome 2003 and calculations by the authors.

  8. Breakdown of ordinary household accounts for the year 2003 using five surveys (3/3) • Breakdown for each component of incomes and consumption, using distribution coming from micro data and benchmarking aggregates on national account figures -> Wages and salaries by age of the head of the household: Source: Insee, National accounts 2003, SILC 2004, Employmentsurvey 2003, housing satellite account 2003 and calculations by the authors.

  9. Part 2: Resultspublished : disposableincome, consumptionexpenditure and savings rate by householdcategories

  10. Results according to standard of living • Standard of living defined as income level per consumption unit (CU) • Households distributed in five equal groups on an increasing scale Disposable income of the most well-off households is five times higher than that of the least well-off Scope : ordinaryhouseholdsresident in mainland France, excl. Fisim. Source : Insee, national account 2003, SILC2004, TaxIncome 2003, Household Budget 2006, housing and healthsurveys, calculations by the authors. Q5/Q1 = 5.0

  11. The 20% richest households receive 40 % of the total amount of disposable income Index 100 for disposable income Scope : ordinary households resident in mainland France, excl. Fisim. Source : Insee, national account 2003, SILC2004, Tax Income 2003, Household Budget 2006, housing and health surveys, calculations by the authors. 78.7 B€ 130.3 B€ 159.2 B€ 218.0 B€ 397.3 B€ 993.4 B€

  12. Ratio Q5/Q1 lower on average consumption expenditure than on disposable income Consumption expenditure by standard of living quintile in 2003 Scope : ordinaryhouseholdsresident in mainland France, excl. Fisim. Source : Insee, national account 2003, SILC2004, TaxIncome 2003, Household Budget 2006, housing and healthsurveys, calculations by the authors. Q5/Q1 = 3.3

  13. The savings rate increases with income level, negative on average for the poorest Savings, in % of disposable income Average savings rate : 17 % Scope : ordinaryhouseholdsresident in mainland France, excl. Fisim. Source : Insee, national account 2003, SILC2004, TaxIncome 2003, Household Budget 2006, housing and healthsurveys, calculations by the authors.

  14. The youngest and single-parent families benefit from private transfers between households Savings rate : Beforeprivatetransfers Afterprivatetransfers Scope : ordinaryhouseholdsresident in mainland France, excl. Fisim. Source : Insee, national account 2003, SILC2004, TaxIncome 2003, Household Budget 2006, housing and healthsurveys, calculations by the authors.

  15. Part 3: A new step to measure how social transfers in kind reduce inequalities : adjusted disposable income and actual consumption by household categories

  16. Main components of social transfers in kind • Transfers in kind for ordinary households in 2003 • 229,5 billions of € • 9 100€ per household • 5 800€ per consumption unit (CU) • Health care reimboursements and education represent the three quarters of transfers in kind; Source :national accounts – Base 2000

  17. Social transfers in kind reduce inequalities . • From 5.0 to 3.2 regarding adjusted disposable income • From 3.3 to 2.2 regarding actual consumption Adjusted disposable income by standard of living quintile in 2003 Actual consumption by standard of living quintile in 2003 Scope: ordinary households resident in mainland France, excl. Fisim. Source : Insee, national account 2003, SILC2004, Tax Income 2003, Household Budget 2006, housing and health surveys, calculations by the authors.

  18. Redistribution in the national accounts framework Primary income (incomes from economic activity and assets) (1) Contributions and taxes (2) Benefits and other transfers in cash (3) Redistribution Disposable income (4) = (1) - (2) + (3) Social transfers in kind (5) Adjusted disposable income (6) = (4)+(5)

  19. A picture of redistribution : the least well-off are the main beneficiaries Transfers in % of primary income Scope: ordinary households resident in mainland France, excl. Fisim. Source : Insee, national account 2003, SILC2004, Tax Income 2003, Household Budget 2006, housing and health surveys, calculations by the authors.

  20. The health care expenses are the highest part of social transfers in kind but the education expenses are a bit more discriminating: Income agregates distribution according to standard of living quintile in 2003 In % (All households = 100) Scope: ordinary households resident in mainland France, excl. Fisim. Source : Insee, national account 2003, SILC2004, Tax Income 2003, Household Budget 2006, housing and health surveys, calculations by the authors.

  21. For the poorest, health care and education represent a third of actual consumption Make-up of consumption expenditure (CE) vs actual consumption (AC) in 2003 Q1 Q5 All households Scope: ordinary households resident in mainland France, excl. Fisim. Source : Insee, national account 2003, SILC2004, Tax Income 2003, Household Budget 2006, housing and health surveys, calculations by the authors.

  22. Social transfers in kind have a key role for the oldest and for large families • Health care : 43% of transfers in kind ..but 78% for the oldest (70 or more) and 69% for families where the head of the household is between 60 and 69 • Education : 33% of transfers in kind ..but 61% for the largest families 52% for families with two children 48% for single parent families

  23. Conclusions • Micro data bridged with national account data on household income and consumption • Main conclusions : • Financial income and savings highly concentrated on the top of the distribution • Some categories of households with low level of income have, on average, negative savings but they are the main beneficiaries of social transfers in kind • For the poorest, health care is the second item in actual consumption • Next steps : patrimony, purchasing power

  24. Thanks for your attention. Results and publications can be found at : In french: http://www.insee.fr/fr/themes/comptes-nationaux/souschapitre.asp?id=72 In english: http://www.insee.fr/en/themes/theme.asp?theme=16

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