Measurement of non market volume output Clarification item C10 Charles Aspden on behalf of François Lequiller OECD

Status of item ISWGNA accepted to open a clarification item C10 on measurement of volume non market output The objective is to incorporate in the SNA the recommendations of the Atkinson report and of Eurostat’s Handbook on volume and prices No conceptual change of the SNA is proposed

Status of item (continued) The message remains to recommend « output methods » for individual services, but to accept « input » methods as a second best for collective services However, reference is made to « willingness-to-pay » as a quality effect, with impact on volume measures (but not on current price measure) The proposal appears as a set of new or amended paragraphs

Theory of marginal benefits 16.134: the general conditions of market prices do not apply for non market prices 16.135: in theory, the price relative of non market services should reflect « marginal benefit », which is equal to « willingness to pay » : there is evidence that the change in the value of many non market services is linked to the general propsperity in a country’s economy

Change in marginal benefit impacts volume 16.136: However, the current price value of government output remains equal to the sum of costs (including capital services?) The change in the marginal benefit for the consumer is to be treated as a change in the volume of the services The rationale is that this price change corresponds to a change in the content of the service. It is therefore treated as a change in quality, thus a change in volume.

Recommendations on output methods 16.139: the objective is to identify that part of the overall change in outcome directly attributable to the non market services 16.140: use cost weights, respect two criteria: reflect full range of services; make allowance for quality change 16.141: test output methods and implied productivity measures with experts of the domain Use input methods if the tests are not satisfactory

Health 16.142: definition of health services main recommendation: use cost-weighted number of treatments, taking into account quality adjustments illustration in the case of hospital services to inpatients: use detailed number of treatments by category of desease adjust, if possible, for quality change

Education 16.143: definition of education services main recommendation: use detailed cost weighted quantity indicator. stratification should at least distinguish pre-school, primary, lower secondary, higher education and other education proposed indicator: number of hours of pupil attendance include quality change (school inspection, pupil/teacher ratio, exam success)

Collective services 16.144 Current SNA paragraph is left unchanged: it may not be feasible to avoid using the input method 16.145 existing SNA paragraph defining how to deflate inputs is left unchanged