sharing economy Jennifer Ribarsky Head of Sectoral National Accounts, OECD Task Force on Price and Volumes Prague, 12 -13 June 2017

Sharing economy Loosely defined concept highlighting exchanges both paid and unpaid in consumption of goods and services and sharing of resources (such as properties or cars) not new per se, but technology have enabled an unprecedented increase in scale and scope GDP, at least conceptually, captures all of the related transactions and value-added created for paid activities. The digital economy tends to be broader. No statistical definition of the digital economy… but the OECD Advisory Expert Group on Measuring GDP in a Digital Economy is tasked with developing what should be included.

New forms of intermediation of Peer-to-Peer services Digital platforms provide intermediation services for supply and demand on product markets Intermediation services not new, but more pervasive and provided differently: Taxi reservation service => Uber Travel agent => Booking.com Hilton online reservations => Airbnb Banks =>Peer-to-peer lending and crowdfunding

Conceptual issues? Margin service provided by intermediator (Occasional) self-employed providing the relevant service Delineation between occasional seller of second- hand goods and small-scale trader Financial intermediation services indirectly measured (FISIM)

Measurement issues? Under-declaration of output by occasional self-employed, but … … in case of Airbnb existing imputation for owner-occupied dwellings … … also note that output ≠ value added, final consumption => intermediate consumption

Possible solutions Digital intermediaries are increasingly called to disclose turnover from clients New approaches to measurement, directly from intermediaries: Airbnb charges VAT on its service fees, or collects an occupancy tax Use of credit card data Big Data

Example 2: Consumers as producers

Consumers as producers: blurring the production boundary Internet access by households has led to blurring between household production for market purposes, own account production, consumption, leisure: Own booking of hotels, flights by households Self-check in at airports Self-service at supermarkets On-line banking In common: movement from dedicated market producers out of market Furthermore, households generate free assets: Wikipedia, Linux Clearly, element of production but also leisure Not captured in GDP The pervasiveness of internet access by households has helped to blur the traditional borderlines between household production for market purposes, own account production, consumption, and leisure. Increasingly households are involved in intermediation that would previously have been the almost exclusive preserve of a dedicated intermediary, in other words households are increasingly engaged in activities that would previously have been included in GDP.

Issues and solutions Is there a conceptual issue? => No Joins traditional discussion about unpaid household activities, such as childcare, preparing meals, gardening Note: Unlikely to resolve productivity and growth puzzle Value of free digital services provided by Wikipedia, range from 0.0004% to as much as 0.0094% of World GDP (OECD-IMF (2017)) Further elaboration in a satellite account type of framework The increased participation of consumers in activities suggests that there may have been quality changes in the final services provided, requiring a careful consideration of the implications on volume estimates of GDP

ICT-enabled cross-border services How to classify the transactions? Do Uber’s cross-border transactions represent business services or transport services? Difference in classification of the service make little difference to estimates of GDP but it matters for trade rules. However, differences in classification: service or primary income do matter for GDP. Should the flows, if they are cross-border, be recorded as the full cost paid by the consumer, or net receipts received by company (e.g. Uber)?

Example 5: Prices and volumes

Prices and Volumes Price measurement may be a major challenge: customisation new goods problem quality levels and change, e.g. Airbnb versus hotels But also problematic to capture the impact on the quality of e.g. health and education Example: software deflators Source: OECD National Accounts Statistics and OECD Productivity Database, February 2017

Price indices for ICT assets and communication services Average annual growth rate in percentage, 2010-2015 (or latest available year) UK showed increases of nearly 3% per year Australia and France showed declines of more than 3% per year Notes: Data reported for Spain for ICT equipment and Computer software and database correspond to the period 2010-2014. Data reported for Austria for Communication services correspond to the period 2011-2015. Source: OECD National Accounts Statistics, OECD Productivity Database, OECD Prices and Purchasing Power Parities database, Australian Bureau of Statistics, U.S. Bureau of Economic Analyses and Statistics Canada, February 2017

Impact on GDP growth, using alternative ICT & communication prices Belgium shows largest impact 0.4%-points Most countries show around 0.2%-points The impact depends on whether the affected products are for final or intermediate uses, and on whether they are imported or domestically produced. Graph only shows the growth rate adjustment implied by the lower bound price indices because the usual mismeasurement concern is that the official price indices under adjust for quality change. Scenario I assumes that imports prices are measured well, so that the adjustments made to the price indices affect only volume estimates of final demand. (Shown by red square- this shows the largest impact on GDP growth (upward revision to GDP growth rates). Scenario II assumes that only import prices are mismeasured and that final demand prices are measured well. (Shown by green triangle- this shows the smallest impact on GDP growth (downward revision to GDP growth rates) Scenario III gives results in between these 2 extremes by adjusting both the final demand and import price indices. (Shown by purple asterisk- shows upward revision to GDP but not as much as in scenario I). Under rather strong assumptions Belgium shows that overall growth rates could be adversely affected by price mismeasurement by as much as 0.4 percent per year (unadjusted GDP growth rate was 1 %, adjusted GDP (red square) 1.4 %). Implied adjustment are only around 0.2% for most countries.

Prices of R&D and Software

Prices and volumes for IPP – Sources and methods Sources and methods to capture price changes include: Specific IPP surveys, labour cost and input cost surveys, indexes of other countries used as proxies (for instance the BLS producer price index for software industry in the case of 4 countries). For own account software, many countries use some variation of an input method or use a SPPI. For R&D, countries can use an index of wage and salary earnings but many countries use the full input method and take into account all relevant input costs (not just wages). The US is the only country that applies a productivity adjustment to the input cost index for R&D.

Thank you for your attention!