ESTP COURSE ON ECONOMIC AND SOCIAL CLASSIFICATIONS Introductory course Day 1 – first morning session Basic principles of classifications Marie-Madeleine Fuger INSEE – France Hans Van Hooff CBS - Netherlands

Definition of a classification A language Behind a given wording whatever the language, the same concept A tool No production of data without structuring reference A model Required for any comparisons

Role of a classification A classification is : A common language A vocabulary as well harmonized as possible Which allows a global knowledge on the organization and the production processes, on the outputs, etc. A selected view of a given universe different possible ways to structure a universe So one selected view Which includes pros and cons (that’s the life…) It is often the result of a compromise

Classification vs Nomenclature Historically “which names” the “nomenclator” named the Roman senators when they entered the Senate Extended to “which structures a universe” the “nomenklatura” in Former Soviet Union (the list of the “advantaged society) generally used in Latin language countries Classification “which structures a universe” e.g. Hierarchical ascendant classification (HAC of the multidimensional data analysis) Both words can be indifferently used In EU: NACE but CPA

What is a classification ? A classification is a tree-structure of successive partitions strictly linked

What is a classification ? Level 1 Item-father 100 200 etc Item-son 110 Item-son Level 2 120 220 210 Level 3

What is a classification ? It is a way to organize an universe in an unambiguous (unequivocal) and structured way Each level is divided into mutually exclusive items Each item is linked to only one item from the upper level Each item-son is ALWAYS Either like the item-father Or a subset of the item-father It is NEVER a grouping of parts of various item-fathers Each item of a level represent an identifiable set of objects Each item is given a name and a code for easier management

The importance of coding Example : 100 Goods 110 Commodities 190 Other goods 200 Services 210 Tourist services 211 Transports 212 Hotel and restaurants 219 Other tourist services 220 Works on a fee and contract basis 221 Treatments of a partial process 229 Other works etc. 100 110 200 120 220 210 … 212 211 219 229 221 (110) (120)

A complete structure The universe Missing items : potential problems when coding and in IT systems

Classification types Codes, catalogues Juridical classifications One item = One object explicitly named e.g. geographical codes dictionnary Juridical classifications Items defined “in extension” Content list finished Statistical classifications Item defined “in comprehension” Content cannot be described as an exhaustive list

Central and dedicated classifications Dedicated : tool set up for a target or an environnment Surveys (collection), uses (synthesis, dissemination) Customs, prices, consumption, production, etc. HS, COICOP for IHCP and HBS, EU Prodcom, etc. Central : all uses To which converge the data provided by the dedicated classifications ISIC and CPC activities : structure the units (which perform activities); products: structure the objects produced and exchanged

Definition of a classification A classification defined only by its structure is not self-sufficient Explanatory notes To describe the content of each item Notes at any level are useful Eventual references to other classifications but A classification must be understood alone Methodology How to use it : concepts, definitions, rules To be relevant, updates and revisions are needed

Construction criteria Generally (by definition) Covering The whole concerned universe is covered All items independent Homogeneity Whatever the criteria : items as homogeneous as possible Relevance Items must be statistically interesting and generally accepted Continuity Statisticians are reluctant to changes :  breaks in their time series

Construction criteria for OCCUPATIONS How jobs can be organised into a clearly defined set of groups? Example of similarity criteria: The tasks or duties performed The level of supervision The level of skill The type of goods or services produced The social status of the work …. Similarity criteria should meet the needs of any user Similarity criteria should meet the needs of any user. Unfortunately different users have different requirements with respect not only to the appropriate level of aggregation but also to the most appropriate similarity criteria. For some users (for example, insurance companies) important criteria may be whether the work is carried out outdoors or indoors, or whether travelling is required or not. For other users, the social status of the work may be most important, or they may want to focus on the materials worked with, the goods and services produced or whether the work requires direct contact with clients and customers. By deciding on the main similarity criteria to be used in the occupational classification, its developers implicitly or explicitly give priority to some users' needs over others. The implications of this for the overall use of the classification must therefore be carefully evaluated.

Construction criteria : TERRITORIES Among others: Administrative structure Geographical characteristics (sea, land, mountain,…. Size Cities vs countryside Postal codes, ..

Construction criteria : Products Different options may be considered List of products arranged in some logical sequence Market-oriented or demand based Intrinsic nature or physical caracteristics of the product Industry of origin Each methodology has pros and cons But, watch out boundary problems

Revision versus Update New « view » New structure eventually, new concepts, new coverage  So, a new classification Update Same structure Minor changes Precisions  The same classification « younger »

Exercise Let’s consider a list of items (construction works) Objective : try to build a classification in 2 levels Define the concepts Define the classification criteria Propose headings : Level 1 has 2 subdivisions Level 2 has no more than 6 subdivisions

Thank you!