Panagiota Tzamourani and Carlos Sánchez Muñoz Q2008, Rome, July 2008

1. A Eurosystem Household Finance and Consumption Survey: Developing the questionnaire for the planned survey Panagiota Tzamourani and Carlos Sánchez Muñoz Q2008, Rome, July 2008

2. The Household Finances and Consumption Survey (HFCS) • Micro data essential to study household financial behaviour, impact of monetary policy, effect of shocks • Similar surveys exist in some euro area countries only – lack of data or data non-harmonised • EU surveys either do not cover wealth and liabilities (eg EU-SILC) or target only parts of the population (eg SHARE)

3. The Household Finances and Consumption Survey – a proposal • Eurosystem ‘Household Finance and Consumption Network’ (HFCN): • Proposal for a survey on HFC for the euro area • Proposal should include: • a common questionnaire • modalities for the survey implementation • an estimate of the associated costs • The survey has not yet been approved

4. This presentation: on the HFCS questionnaire • Topics • Questionnaire challenges • Due to the survey topic • Due to the international nature of the survey • Development process • pretests • Resolutions • Content and definitions • Structure and wording

5. Questionnaire to cover • Real assets and financial wealth • Liabilities and credit constraints • Income • Consumption • Pensions and insurance policies • Intergenerational transfers • Demographics and employment • [Payment habits]

6. Data requirements • Data adequate to address key issues for monetary policy analysis, financial stability analysis and research • Consistency with macro data (National Accounts, banking statistics) • Consistency with other European survey data (eg. SILC)

7. Challenges posed by the survey topic • Detail required, but questions sensitive, questionnaire can become too long • Information required ‘difficult’, eg portfolio composition: find alternative ways of getting information, or, simply resign (!) • Translate economic concepts and statistical classifications into everyday language • Ensure a natural flow of the questionnaire, relax respondents after demanding sections

8. Challenges posed by the international nature of the survey • Different structure of household assets (real/financial): level of detail required different in each country • Different prevalence and use of loan types (mortgage collaterals; credit cards) • Understanding and knowledge of common concepts varies, eg • Salaries: Gross or net, monthly or annual • Reference period for income and wealth (more general: connected with the use of tax records, time period of fieldwork) • Differences in the characteristics and labelling of financial products, eg • Sight accounts (current accounts, saving accounts) • Individual retirement accounts or life insurance • Differences in the pension systems across countries • Social security /occupational pensions • Comparability with existing time series

9. The process of developing the questionnaire • May-July 2007: drafting questionnaire, written procedure • In parallel: Drafting of the handbook of definitions • September 2007: Irish pretest (60 cases, spread over 3 phases) • November 2007: Revision based on pretest results and written procedure • January 2008: Greek pretest (30 Cases) of new version • February 2008: revision and streamlining from ‘Questionnaire subgroup’ • Spring 2008: • German pretest (20+180 cases) • Belgian pretest (40 cases) • Portuguese pretest (80 NCB staff) • Summer 2008: final revision

10. Questionnaire pretests: aims • Ascertain appropriateness of questionnaire content • Test understanding of the questions and ease with which questions can be answered • Time each phase of interview • ‘Core’ and ‘non-core’ (optional) components • Test impact of sectioning ordering • Test appropriateness of reference person for household questions // feasibility of getting responses from all adults • Phrasing in own language • Implementation issues, e.g. survey letter, non-response, interviewers’ training, understanding and performance, oversampling the wealthy

11. Questionnaire pretests: some lessons (1) Ireland (September 2007, 60 cases, PAPI) • July version comprising core and non-core questions unworkably long • Perceived duplication of income questions (last years’ annual income and current monthly income) • Lack of knowledge about pensions held • Interest rates not known • Self-employed often found income difficult to report • Popular questions: consumption, attitudes, payment habits (non-core) • Resented questions: parents’ occupation, credit constraints, cash in the house

12. Questionnaire pretests: some lessons (2) Germany (Spring 2008, 200 achieved interviews, CAPI + self-completion) • Questionnaire overall well received • Fine-tuning needed: modify some questions and lists of answer categories Belgium (Spring 2008, 40 cases, PAPI) • Questions overall well received - very few criticism on the questions, except • Income and pension sections inappropriate for many children above 16 • Questions on mutual funds considered intrusive

13. The HFCS approach • Overall: output oriented approach, i.e. countries bound to common definitions rather than questionnaire • Streamlined ‘core’ questionnaire /output variables, to be complemented by ‘non-core’ and country specific variables, so that • average interview length about 1 hour • basic requirements of data provided covered • concepts applicable and relevant to all countries • Blue-print common questionnaire to be used in countries with new surveys

14. HFCS – current questionnaire structure Pre-interview: selection of respondent/ Household listing Employment Income Demographics Pensions and insurance policies Real assets and their financing Intergenerational transfers / gifts Other liabilities / Credit constraints Consumption Private businesses / Financial assets Post-interview: interviewer debriefing Pre/post interview Individual questions Household questions

15. HFCS data issues: comparability • Comparability with National Accounts • Countries to make the distinction between producer households and quasi corporations • Calculation of some ESA95 wealth components; further comparability possible by adding ‘non-core’ questions • Comparability with other survey data: • Income: in line with Canberra report recommendations • Definitions to the extent possible consistent with EU-SILC and Eurostat's Concepts and Definitions Database, the OECD glossaries and other standards

16. HFCS data issues: reference period Reference period for income and wealth: • optimal for wealth: current status • for (annual) income: • Last calendar year • Accurate: respondents could consult records, e.g. tax files • Could be out-of-date, particularly if fieldwork after the middle of the year • Inconsistent with wealth • Last twelve months (chosen) • Closer to fieldwork • Consistent with wealth

17. HFCS data issues: pensions, consumption • Pensions • Only indicator variables: social insurance/ private plans, contributions • Consumption • Only indicator variables: Money spent on food outside home, money spent on food at home

18. HFCS: ease respondents’ burden • Use a communication strategy that creates trust and stresses confidentiality and anonymity • Streamlined questionnaire • Add some ‘soft’ questions to relax respondents • Allow households to report what they know best (eg monthly amounts for some income types)

19. Conclusions and next steps • Overall current questionnaire well received • Countries with existing surveys will be using their own questionnaire, with amendments so that they can provide the ‘core’ variables • New surveys will use Eurosystem questionnaire • Governing Council will decide on the proposal this autumn • First countries to implement survey in 2009

20. Thank you