NATIONAL STATISTICAL COORDINATION BOARD International Workshop on Household Income, Consumption & Full Accounting of the Household Sector, Beijing, China RJ Talento /26-28 March 2012 Presented by Raymundo J. Talento Director, Economic Statistics Office National Statistical Coordination Board International Workshop on household Income, Consumption and Full Accounting of the Household Sector Beijing, China March 2012 ESTIMATION OF THE HOUSEHOLD SECTOR (Philippine Case)

NATIONAL STATISTICAL COORDINATION BOARD International Workshop on Household Income, Consumption & Full Accounting of the Household Sector, Beijing, China RJ Talento /26-28 March Outline of the Prensentation I.Introduction II.Scope and Coverage III.Data Sources IV.Estimation Methodology V. Issues/concerns

NATIONAL STATISTICAL COORDINATION BOARD International Workshop on Household Income, Consumption & Full Accounting of the Household Sector, Beijing, China RJ Talento /26-28 March Measurement of GDP Three approaches in GDP Measurement 1.Production Approach, GDP (P) 2. Expenditure Approach, GDP (E) 3. Income Approach, GDP (I) I. Introduction

NATIONAL STATISTICAL COORDINATION BOARD International Workshop on Household Income, Consumption & Full Accounting of the Household Sector, Beijing, China RJ Talento /26-28 March Production Approach, GDP (P) Unduplicated sum of all the goods and services produced in the domestic economy (by resident producers) Measurement of GDP by industrial origin Measurement of GDP contn… Formula: GDP (P) = GVA where: GVA = Gross Value Added = Gross Output Less Intermediate Inputs I. Introduction

NATIONAL STATISTICAL COORDINATION BOARD International Workshop on Household Income, Consumption & Full Accounting of the Household Sector, Beijing, China RJ Talento /26-28 March Expenditure Approach, GDP (E) Sum of the final uses of goods and services (all except intermediate consumption) measured at purchasers prices, less the value of imports of goods and services Measurement of GDP contn… Formula: GDP (E) = HFCE + GFCE+ GDCF + X – M where: HFCE= Household Final Consumption Expenditure GFCE= Government Final Consumption Expenditure GDCF= Gross Domestic Capital Formation X= Exports M= Imports I. Introduction

NATIONAL STATISTICAL COORDINATION BOARD International Workshop on Household Income, Consumption & Full Accounting of the Household Sector, Beijing, China RJ Talento /26-28 March Income Approach, GDP (I) Sum of primary incomes distributed by resident producer units Measurement of GDP contn… Formula: GDP (I) = CE + D + T – S + OS where: CE= Compensation of Employees D= Depreciation T= Taxes (products/production) S= Subsidies OS= Operating Surplus I. Introduction

NATIONAL STATISTICAL COORDINATION BOARD International Workshop on Household Income, Consumption & Full Accounting of the Household Sector, Beijing, China RJ Talento /26-28 March Income Approach, GDP (I) By institutional units. In the present PSNA these are : Non-Financial Financial Government; and Households and unincorporated enterprises, including non-profit institutions serving households Also the Rest of the World (ROW) – viewed as the grouping of all non-resident units. Measurement of GDP contn… I. Introduction

NATIONAL STATISTICAL COORDINATION BOARD International Workshop on Household Income, Consumption & Full Accounting of the Household Sector, Beijing, China RJ Talento /26-28 March Gross National Income (GNI) Covers (Income from) Production within the domestic territory (GDP), including production from the rest of the world (NFIA) provided by residents of the Philippines Measurement of GNI (GNP) Formula: GNP = GDP + NPIA where: GDP= Gross Domestic Product NPIA= Net Primary Income From Abroad I. I. Introduction

NATIONAL STATISTICAL COORDINATION BOARD International Workshop on Household Income, Consumption & Full Accounting of the Household Sector, Beijing, China RJ Talento /26-28 March THUS, THE PSNA GENERATES PRODUCTION, EXPENDITURES AND INCOME ESTIMATES I. Introduction

NATIONAL STATISTICAL COORDINATION BOARD International Workshop on Household Income, Consumption & Full Accounting of the Household Sector, Beijing, China RJ Talento /26-28 March HFCE consists of actual and imputed expenditures of households for the purpose of acquiring individual consumption of goods & services. Includes: - Individual and institutional households (HHs) - Non-profit institutions serving households (NPISH): II. Scope and Coverage

NATIONAL STATISTICAL COORDINATION BOARD International Workshop on Household Income, Consumption & Full Accounting of the Household Sector, Beijing, China RJ Talento /26-28 March HFCE – classified according to purpose - based on the Classification of Individual Consumption according to Purpose (COICOP) as recommended by the 2008 SNA II. Scope and Coverage

NATIONAL STATISTICAL COORDINATION BOARD International Workshop on Household Income, Consumption & Full Accounting of the Household Sector, Beijing, China RJ Talento /26-28 March HFCE – includes: 1.Food and Non-alcoholic Beverages 2.Alcoholic Beverages and Tobacco 3.Clothing and Footwear 4.Housing, Water, Electricity, Gas and Other Fuels 5.Furnishings, Household Equipment and Routine Household Maintenance 6. Health 7.Transport 8.Communication 9.Recreation and Culture 10. Education 11. Restaurants and Hotels 12. Miscellaneous Goods and Services II. Scope and Coverage

NATIONAL STATISTICAL COORDINATION BOARD International Workshop on Household Income, Consumption & Full Accounting of the Household Sector, Beijing, China RJ Talento /26-28 March Data/information used : -Family Income and Expenditures Survey (FIES) of NSO -Consumer Price Index (CPI) of NSO Input-Output (I-O) Table of NSCB -Total output of industry sectors from the estimates of the National Accounts of the NSCB -Foreign Trade Statistics (FTS) of NSO -Administrative-based data of various agencies (i.e. volume & value of removals for cigars, cigarettes & alcoholic drinks from the BIR) III. Data Sources

NATIONAL STATISTICAL COORDINATION BOARD International Workshop on Household Income, Consumption & Full Accounting of the Household Sector, Beijing, China RJ Talento /26-28 March Benchmark Year - adopted as initial estimate the 2000 I-O estimates of HFCE, with each HFCE I-O code/description classified according to COICOP. IV. Methodology

NATIONAL STATISTICAL COORDINATION BOARD International Workshop on Household Income, Consumption & Full Accounting of the Household Sector, Beijing, China RJ Talento /26-28 March Non-benchmark Year ( , ) -the 2000 benchmark estimate of HFCE by sub-component was extrapolated using the trend of the gross output of related industry sector -estimates are reconciled with the other sectors through the supply and use table -it is further validated using the expenditure structure derived from the FIES. IV. Methodology

NATIONAL STATISTICAL COORDINATION BOARD International Workshop on Household Income, Consumption & Full Accounting of the Household Sector, Beijing, China RJ Talento /26-28 March SHOULD THE INCOME AND EXPENDITURES DATA OF THE PSNA AND THE FIES BE CONSISTENT? RECONCILED? V. Issues & Concerns

NATIONAL STATISTICAL COORDINATION BOARD International Workshop on Household Income, Consumption & Full Accounting of the Household Sector, Beijing, China RJ Talento /26-28 March is a household survey being conducted by the NSO every three years Provides data on family income and expenditures which include among others levels of consumption by item of expenditure as well sources of income in cash and in kind Source of weights for the CPI Used for computing poverty incidence Used for analyzing income distribution Used as an indicator for NA purposes What is the FIES? V. Issues & Concerns

NATIONAL STATISTICAL COORDINATION BOARD International Workshop on Household Income, Consumption & Full Accounting of the Household Sector, Beijing, China RJ Talento /26-28 March V. Issues & Concerns The FIES does not collect income/expenditures data from Non-Financial Institution Financial Institution Government Non-profit institutions serving households Rest of the World (ROW)

NATIONAL STATISTICAL COORDINATION BOARD International Workshop on Household Income, Consumption & Full Accounting of the Household Sector, Beijing, China RJ Talento /26-28 March V. Issues & Concerns In the PSNA, the Transactors (Institutional Sectors) of the Economy are: Non-Financial Institution Financial Institution Government; and Households and unincorporated enterprises, including non-profit institutions serving households Also Rest of the World (ROW) – the grouping of all non-resident units.

NATIONAL STATISTICAL COORDINATION BOARD International Workshop on Household Income, Consumption & Full Accounting of the Household Sector, Beijing, China RJ Talento /26-28 March V. Issues & Concerns Therefore, if one must compare income data from the PSNA and the FIES, the closest one may look for comparability is THE HOUSEHOLD SECTOR!

NATIONAL STATISTICAL COORDINATION BOARD International Workshop on Household Income, Consumption & Full Accounting of the Household Sector, Beijing, China RJ Talento /26-28 March IS FIES INCOME = PSNA INCOME OF THE HOUSEHOLD SECTOR? V. Issues & Concerns

NATIONAL STATISTICAL COORDINATION BOARD International Workshop on Household Income, Consumption & Full Accounting of the Household Sector, Beijing, China RJ Talento /26-28 March FIES INCOME REFERS TO INCOME IN CASH AND IN KIND RECEIVED BY THE HHs FIES INCOME INCLUDES (FIES QUESTIONNAIRE): PART III: INCOME AND OTHER RECEIPTS PART IV: ENTREPRENEURIAL ACTIVITIES PART II: EXPENDITURE AND OTHER DISBURSEMENTS ( RECEIVED AS GIFTS) V. Issues & Concerns

NATIONAL STATISTICAL COORDINATION BOARD International Workshop on Household Income, Consumption & Full Accounting of the Household Sector, Beijing, China RJ Talento /26-28 March FIES INCOME INCLUDES: V. Issues & Concerns Salaries and wages from employment Net share of crops, fruits and vegetables produced or livestock and poultry raised by other households Cash receipts, gifts, support, relief and other forms of assistance from abroad Cash receipts, support, assistance and relief from domestic source Rentals received from non-agricultural lands, buildings, spaces and other properties Interest

NATIONAL STATISTICAL COORDINATION BOARD International Workshop on Household Income, Consumption & Full Accounting of the Household Sector, Beijing, China RJ Talento /26-28 March FIES INCOME INCLUDES contn: V. Issues & Concerns Pension and retirement, workmens compensation and social security benefits Dividends from investment Other sources of income not elsewhere classified Family Sustenance Activities Total Income from Entrepreneurial Activities Goods and Services Received as gift Imputed Rental Value of Owner-Occupied Dwelling Units

NATIONAL STATISTICAL COORDINATION BOARD International Workshop on Household Income, Consumption & Full Accounting of the Household Sector, Beijing, China RJ Talento /26-28 March PSNA HH INCOME ALSO BASICALLY REFERS TO INCOME IN CASH AND IN KIND RECEIVED BY THE HOUSEHOLD SECTOR PSNA HH INCOME = COMPENSATION + OPERATING SURPLUS + PROPERTY INCOME + TRANSFERS V. Issues & Concerns

NATIONAL STATISTICAL COORDINATION BOARD International Workshop on Household Income, Consumption & Full Accounting of the Household Sector, Beijing, China RJ Talento /26-28 March V. Issues & Concerns SOURCES OF DIFFERENCES 1.COVERAGE 2.CONCEPTUAL/DEFINITION OF INCOME 3.METHODOLOGICAL ( NOS OF HHS) 4.DATA-RELATED

NATIONAL STATISTICAL COORDINATION BOARD International Workshop on Household Income, Consumption & Full Accounting of the Household Sector, Beijing, China RJ Talento /26-28 March Differences between the national accounts of the NSCB and the income data from the FIES of the NSO. In terms of COVERAGE: PSNAFIES Household & Unincorporated Enterprises Individual Households Institutional Households Non-profit Institution Serving Household V. Issues & Concerns

NATIONAL STATISTICAL COORDINATION BOARD International Workshop on Household Income, Consumption & Full Accounting of the Household Sector, Beijing, China RJ Talento /26-28 March Differences between the national income accounts of the NSCB and the income data from the FIES of the NSO. In terms of TYPE OF INCOME covered: NA covers income of household derived from engaging in unincorporated enterprises, compensation of employee, property income from investments of assets, depreciation from the use of assets, transfers, taxes, subsidies V. Issues & Concerns

NATIONAL STATISTICAL COORDINATION BOARD International Workshop on Household Income, Consumption & Full Accounting of the Household Sector, Beijing, China RJ Talento /26-28 March Differences between the national income accounts of the NSCB and the income data from the FIES of the NSO. In terms of TYPE OF INCOME covered: FIES Includes income defined in the NIA but excludes items on depreciation and indirect taxes or subsidies V. Issues & Concerns

NATIONAL STATISTICAL COORDINATION BOARD International Workshop on Household Income, Consumption & Full Accounting of the Household Sector, Beijing, China RJ Talento /26-28 March Differences between the national income accounts of the NSCB and the income data from the FIES of the NSO. In terms of METHODOLOGY : PSNA Net Operating Surplus of Households is residually calculated FIES Total Income from Entrepreneurial Activities V. Issues & Concerns

NATIONAL STATISTICAL COORDINATION BOARD International Workshop on Household Income, Consumption & Full Accounting of the Household Sector, Beijing, China RJ Talento /26-28 March Differences between the national income accounts of the NSCB and the income data from the FIES of the NSO. In terms of DATA-RELATED DIFFERENCES : FIES HH response based on recall - underreporting/overreporting of income/expenditures PSNA Data comes from different sources and estimates are validated through the SUT V. Issues & Concerns

NATIONAL STATISTICAL COORDINATION BOARD International Workshop on Household Income, Consumption & Full Accounting of the Household Sector, Beijing, China RJ Talento /26-28 March Thank You!