1

Social statistics on economic resources: a user perspective

Marco Mira d’ErcoleCounsellor, OECD Statistics Directorate

UNSD Expert meeting on the Scope and Content of Social Statistics,

9-12 September 2008

ESA/STAT/AC.161/Ec.1

2

Social statistics on economic resources are attracting much policy interest

Statement of OECD Secretary General at the Ministerial meeting (May 2008)

Commission on the “Mésure du pouvoir d’achat des menages” reporting to the French Minister of Finances (February 2008)

“Commission on the Measurement of Economic Performance and Social Progress” (Stiglitz, Sen, Fitoussi) established by the French Presidency

Big opportunity but also challenge to the statistical community to come up with credible data

3

Long stream of OECD work on household economic resources and their distribution

Comparisons of 12 countries in mid-1970s based on most-commonly used sources (Malcom Sawyer)

Report for the OECD by Tony Atkinson, Lee Rainwater and Tim Smeeding (LIS based) in 1995

Periodic data collection based on a network of consultants since late 1990s (every 5 years); latest report (Growing Unequal?) to be presented on 21 October 2008

4

“Benchmark” definition of household economic resources (as used by OECD)

Household disposable income excluding imputed elements such as rents from own-occupation

Household income adjusted for differences in needs (square root elasticity)

Distribution of household income across people (rather than households/families)

Common assumptions on how to treat negative income and to aggregate across components

Overall: much progress since early efforts

5

Expert Group on Household Income Statistics (Canberra Manual)

It has played a critical role in allowing better comparative work on household income distribution

Most recommendations have stood well the test of time Some areas where revisiting of concepts is needed:

– Non-standards households– Income flows that are not regular

6

Beyond concepts, areas for improvements in the measurement of household disposable income

Ongoing monitoring of the extent to which national surveys departs from benchmark definitions (e.g. Appendix 6 of Canberra Report “Robustness assessment report for income distribution data”)

Reconciliation between micro and macro estimates of household income (to assess “quality” of survey measures; to allow developing household accounts in the SNA for more homogeneous categories)

Temporal consistency of the data (better surveys typically replace older ones, no bridge between old and new data)

7

“Big” challenge ahead: moving beyond household income as measure of economic resources (1)

In-kind services (in particular “public” services that confer personal benefit to users).– Large on average; SNA already includes measures of

“actual” consumption and household income– Big impact on measures of inequality in the distribution of

economic resources of households– To allow imputations, surveys should include questions

about use of public services– Importance of ongoing discussions on the measurement of

government services in the SNA (from input to output measures)

8

“Big” challenge ahead: moving beyond household income as measure of economic resources (2)

Other non-cash income flows– Agricultural goods for own-production (important for

countries with large subsistence agriculture)– Imputed rents from own occupation– Capital gains on asset holdings

As in the case of in-kind services, it is important to produce these measures of “expanded” economic resources alongside (rather than in substitution) conventional ones.

9

“Big” challenge ahead: moving beyond household income as measure of economic resources (3)

Household wealth:– Theoretical case established since Samuelson; in practice,

limited developments (both at macro and micro level)– Progress with the establishment of Luxembourg Wealth

Study: but limited country-coverage and large differences in the asset-types covered (implications for results)

– Need of an analogue of the “Canberra manual” to achieve greater ex-ante standardisation in household wealth results.

10

Conclusion: further ahead

Economic resources matter for well-being as determinants of consumption possibilities: but we also need direct measures of these possibilities.– Measures of actual consumption expenditures.– Measures of access to critical consumption items and

activities (i.e. deprivation / hardship).– Measures of family and community ties (i.e. support they

provide at times of greater need)