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Measurement of Government Output and Productivity for the National Accounts : Interim Report

Measurement of Government Output and Productivity for the National Accounts : Interim Report. Tony Atkinson. Purposes and Limits of National Accounts. Macro-economic management Measuring contribution of economic activities to welfare

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Measurement of Government Output and Productivity for the National Accounts : Interim Report

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  1. Measurement of Government Output and Productivity for the National Accounts:Interim Report Tony Atkinson

  2. Purposes and Limits of National Accounts • Macro-economic management • Measuring contribution of economic activities to welfare • Coherent with, but different from, micro-measures of efficiency of service providers or agency targets. Subject of Review = National accounts

  3. European Implementation • ESA 1995 • Handbook on price and volume measures in national accounts 2001 • EU Decision of 2002 A Long-Running Story • Conventional approach Output = Inputs Assumes zero productivity growth • SNA 1993 approach DIRECT measurement of output

  4. Handbook on price and volume measures in national accounts • Inputs: e.g. number of doctors • Activities: e.g. number of operation • Outputs: e.g. amount of care received by a patient • Outcomes: e.g. improved health Individual services supplied to individuals (such as health or education)Collective services provided to society as a whole (such as defence)

  5. The A/B/C Criteria for methods

  6. ONS Programme of Introducing Direct Output Measures 1998-

  7. Key Findings of Interim Report • ONS among the first to introduce direct measures, but “first generation” methods need to be refined (as already in health). • Interim Report sets out a principled approach within the framework set by international guidelines. • Important to improve measures of government inputs as well as outputs. • Need for increased statistical resources to be allocated to measuring government outputs and inputs.

  8. Principles Output • Output should be measured by incremental contribution to individual or collective welfare i.e. the added value by service concerned. • Start from services provided, and seek indicators that give full coverage. • Value should be seen as adjusted for quality. • Formal criteria should be established for extending direct output measures to further services. • Measures should cover the whole of the UK.

  9. Added Value • Parallel with market output • Measures incremental contribution to individual or collective welfare • Value depends on quality and context Input Activities Output Outcome

  10. Extending Coverage Criteria for introducing a new direct output measure: • Cover the full range of services • Makes allowance for quality change. • Effects have been tested service by service. • Context has been fully assessed, including implied productivity estimate.

  11. Principles Inputs and Productivity • Measures of inputs should be as comprehensive as possible, and should include capital services • Consideration should be given to the split between current and capital spending. • Criteria should be established for price deflators applied to input spending series. • Independent corroborative evidence should be sought on government productivity, as part of a process of “triangulation”.

  12. Examination of Input Data Issues • Matching classifications. • Timeliness. • Reliance on a small number of pay and price deflators • Capital consumption data.

  13. Triangulation Outputs divided by = Productivity Inputs ….we need to work on all three.

  14. Necessary WorkProgrammes • Review has already established work programmes with Departments covering key areas. • Report sets out questions that need to be addressed in each field.

  15. Necessary Work Programmes • Health: improved measures introduced in June 2004; further work on quality adjustment, UK coverage, GP usage; productivity article to be published. • Education: improved volume and attainment measures, exploration of quality adjustments, and value of education approach, possible satellite account. • Public Order and Safety: work on division between collective and individual services, alternative output measures, UK coverage. • Social Protection: work on improved coverage, UK coverage, relation with market sector.

  16. Final Report To be prepared by January 2005 Will draw on responses to Interim Report and discussions with international organisations and national statistical agencies.

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