It’s about households

1. It’s about households Jennifer Ribarsky Head of Section Sectoral and National Accounts OECD Group of Experts on National Accounts Meeting Geneva, 7 -9 May 2014

2. 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”

3. 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)

4. 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

5. 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

6. Adjusted disposable income by quintiles

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

8. Actual final consumption by quintiles

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

10. Aggregate gross household saving rates 1993-2012

11. 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

12. Transactions and transfers between households of different quintiles Impact of transfers between households on saving rates positive values refer to higher saving rates after transfers were taken into account

13. 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

14. 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

15. Drivers of difference between GDP and HH adjusted disposable income

16. Thank you for your attention!