Copyright 2010, The World Bank Group. All Rights Reserved. Business tendency surveys, part 2 1 Business statistics and registers

Copyright 2010, The World Bank Group. All Rights Reserved. Survey frame BTS carried out by trade associations use their membership list as the survey frame The international recommendation for BTS is to use comprehensive business registers that are also used for other business surveys A reasonably comprehensive business register is a prerequisite for good business tendency surveys 2

Copyright 2010, The World Bank Group. All Rights Reserved. Choice of statistical units Many enterprises cannot provide information for their establishments Some enterprises can report for their local units Others can report for their kind of activity units The choice of reporting unit can influence survey results Basing a survey on establishment units is the best solution 3

Copyright 2010, The World Bank Group. All Rights Reserved. Sample design Three methods: 1.Data collection from all enterprises 2.Judgmental sample 3.Random sample 4

Copyright 2010, The World Bank Group. All Rights Reserved. Panels Original panel based on stratified random sample Using a panel reduces sample variance Using a panel has also practical advantages Panel must be periodically refreshed, e.g. by changing 25% of enterprises each quarter 5

Copyright 2010, The World Bank Group. All Rights Reserved. Sample size With random sampling the sample size depends on the variance of one or two key variables and on the desired level of precision Experience shows that often about 30 reporting units are sufficient to obtain an acceptable level of precision for each strata for which data are to be published 6

Copyright 2010, The World Bank Group. All Rights Reserved. Response management Keep in touch with respondents Personal contacts enhance response rates Helping respondents understand questions Contacts with respondents may help to improve the questionnaire 7

Copyright 2010, The World Bank Group. All Rights Reserved. Quality of surveys Quality elements include reliability, timeliness, comparability, transparency and accessibility BTS are normally timely because questionnaires can easily be completed and the number of questions is small Use of harmonized questionnaires enhances comparability over time and between countries 8

Copyright 2010, The World Bank Group. All Rights Reserved. Measurement error Measurement errors are generated by questionnaires and respondents Errors caused by questionnaires relate to:  ambiguous phrasing of questions  unclear layout of questionnaire Errors stemming from respondents may be caused by:  insufficient knowledge to answer correctly  lack of motivation to report correctly 9

Copyright 2010, The World Bank Group. All Rights Reserved. From percentages to single number Results obtained must be presented as a time series Multiple percentages are difficult to interpret Therefore, results are normally presented as a single number Two methods: 1.Balances 2.Diffusion indices 10

Copyright 2010, The World Bank Group. All Rights Reserved. Balances method In most BTS respondents have three reply options: up/above normal (+), same/normal (=) and down/below normal (-) (=) replies are often discarded, but may be presented separately To calculate the balance, first transform replies into percentages Then subtract (-) from (+) to calculate the balance 11

Copyright 2010, The World Bank Group. All Rights Reserved. Diffusion indices Balances (B) are calculated as: B = 100 ( P – N ) Diffusion indices (DI) are calculated as 100 ( P + E/2 ), where P is the fraction of (+) replies in the total, N of (-) replies, and E of (=) Balances can take values from –100 to +100, diffusion indices from 0 to 100. Balances and diffusion indices have exactly the same information content Balances are more commonly used 12

Copyright 2010, The World Bank Group. All Rights Reserved. Weighting Two types of weighting: 1.Sample weights 2.Size weights Sample weights are the inverse of the probability of selection Size weights reflect the relative contribution of enterprises Value added is probably the best size weight In practice, number of employees is more often used 13

Copyright 2010, The World Bank Group. All Rights Reserved. Publication As for all statistics, metadata must be presented for BTS surveys as well Metadata must cover information about: The sampling frame Statistical units Sampling Weighting Data collection methods Treatment of non-response Precision Comparability 14

Copyright 2010, The World Bank Group. All Rights Reserved. Interpretation Because BTS are subjective, respondents may interpret questions differently Issues of different interpretation are:  What is ‘normal’?  What reference period to use  How to judge ‘capacity utilization’?  Expected ‘business situation’ Systematic bias is also possible Experience shows that most of these factors do not seriously distort BTS results 15