Workshop on Measuring Household Production, IATUR 2014 Conference, Turku 29 July 2014

1. Introduction to the Household Satellite
Accounts (HHSA)
Katri Soinne
Statistics Finland

2. Content
 SNA and the idea of satellite accounts
 Production boundary: SNA vs. non-SNA - why household
production is not included inside the production boundary?
 Households in SNA
 Household production and the satellite
 Market and non-market producers
 Output vs. input method
2IATUR - Workshop on Household Satellite 29 July 2014

3. The System of National Accounts...
 … is a recommendation for calculating and describing all
the economic activities in the economy
 … is based on the theory of economics
 … includes a lot of definitions and agreements
 … gives a possibility to comparisons between years and
countries
 … does not describe well-being
 ... does not include household production (i.e. unpaid
services produced for own consumption) according to an
agreement
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4. Two types of Satellite Accounts (SNA 2008): extra focuses or extensions
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CORE SYSTEM
NACE Sector S12 S11 S13 S15 S2 S14
A
B
C
D
E
F
G
H
I
J
K
L
M
N
O
P
Q
R
S
T
U
Extra focus
Extension

5. Definition of production and the production boundary
 Production is “an activity carried out under the control and
responsibility of an institutional unit that uses inputs of
labour, capital and goods and services to produce outputs
of goods and services. Production does not cover purely
natural processes without any human involvement or
direction,…”
 Production boundary includes all individual or collective
goods and services that are supplied to the market as well
as the own-account production of all goods for own final
consumption or gross fixed capital formation (and excludes
the own-account production of services for own final
consumption)
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6. Why household production is not included in the
production in National Accounts?
 No unambiguous price
 The output is consumed at the same time and place
 Would make the analysis of economic activities more
difficult
 The concept of unemployment would disappear
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7. Production or not in SNA
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YES NO
A) Growing potatoes to be sold to the factory………………….
B) Growing potatoes for your own use..…………………………
C) Gathering fruits and berries in the woods……………………
D) Preserving the gathered berries............................................
E) You are eating at a restaurant……………...…………..........
F) You are preparing a meal for your family.……………………
G) You are cleaning your house…………………………...........
H) You are hiring a cleaner for your house.…………………….
I) You are cleaning the house of your mother-in-law.................
J) You are hiring a cleaner for your mother-in-law....................
K) You go for grocery shopping.................................................

8. Households in SNA
 Definition of household (ESA2010): “an individual or a
group of individuals as consumer as well as those people
as producers of goods and non-financial services for
exclusively own final use”
 Own-account production of goods (ESA2010):
 Own-account construction of dwellings
 Production and storage of agricultural products
 Processing of agricultural products
 Production of other primary products
 Other kinds of processing
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9. Household production/ Domestic work
 Definition of household production (Economic Glossary):
“the creation of satisfaction using both goods purchased in
markets and the uncompensated efforts of consumers”
 Non-SNA household production:
 Cleaning, maintenance and repair (=housing)
 Preparation and serving of meals & snacks
 Care (children, adults in needs)
 Clothing (including laundry and clothing care)
 Voluntary work (informal and unpaid help to other
households and organizations)
 So called third party criteria: “if somebody else could do it,
it is household production”
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10.  The goal is to measure the value of household production
(most of which are non-SNA actions)
 Existing information
 in SNA: housing, output of goods for own final use, hunting, etc.
 non-SNA sources: Time Use Survey, Household Budget Survey, Wage
Statistics, other sources
 Challenges:
 value of work
 definitions
 valuation of services
 One figure (“share of GDP”) is not easy: part of household
production is already included in GDP
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Household (Production) Satellite

11. GDP and Household Production
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GDP
Non-SNA household
production
SNA household
production
Household
production
satellite
Rest of GDP
(=GDP –
SNA
household
production)

12. Market vs. non-market producers
 Price of sold products covers the
production costs (50% rule) =>
market output by market
producers
 Counting from top to bottom -
starting with output, ending with
operating surplus/ mixed income:
output - intermediate
consumption
= value added (gross) - CFC
= value added (net) -
compensation of employees
- taxes + subsidies
= operating surplus/ mixed
income
 Products are free or the price
does not cover the expenses =>
non-market output by non-market
producers
 Different valuations
 Counting from bottom to top:
output = sum of costs (no
operating surplus/ mixed income)
compensation of employees +
taxes - subsidies
= value added (net) + CFC
= value added (gross) +
intermediate consumption
= output
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13. Market production – Non-market production
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Output
Market output
Output for own final use
Intermediate consumption
Value added, gross
Consumption of fixed capital
Value added, net
Wages and salaries
Operating surplus/ mixed
income
100
20
55
5
40 50
10
40
5
15

14. Output method
 Calculation like market production (includes operating
surplus)
 Comparable with market output (value equal to market
prices of similar products)
 Gives possibilities to measure productivity
 In theory preferable method, in practice not used very
much
 Data collection is very expensive
 Definition of output (for example travel and transport)?
 Guidelines not clear
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15. Input method
 Calculation like non-market production (does not include
operating surplus)
 Comparable with non-market output
 Data available via Time Use Survey => valuing unpaid
work time by a suitable wage (or wages)
 Easier in practice and has been used in most of the studies
about household production
 Needs also common practices and guidelines to produce
comparable results between different countries and studies
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16. Our workshop continues…
 … the time use data: what is required for household
production satellite?
 … valuation of labour: whose wage? Which wage concept?
 … consumption: final consumption of households divided in
intermediate consumption, final consumption and
investments for satellite
 … compiling the set of accounts: the idea of sector
accounts and the calculation of extended household
accounts
 … the use of results: which kind of households are
producing and what?
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