Plans for a euro area survey on household finance and consumption * Michael Ehrmann, Caroline Willeke, Carlos Sánchez Muñoz, Philip Vermeulen ECB Rome, LWS Conference, 5-7 July 2007 * This presentation reflects the views of the authors and not necessarily those of the ECB or of the members of the Household Finance and Consumption Survey Network

Main rationale for the questionnaire (1) Support policy analysis in all major functions of the Eurosystem Survey provides: - Consistent cross-country picture of household assets and liabilities - For heterogeneity of household sector; analysing its behaviour using only macro data may be misleading - Micro data needed to uncover structural relationships

Main rationale for the questionnaire (2) Provides new insights on: -vulnerability of the household sector to asset price changes (e.g. real estate price declines and interest rate changes) -the propensity to consume out of wealth -financial integration and innovation at the retail level -the impact of aging and pension reforms on household saving and consumption patterns. -credit constraints or other credit market imperfections and consumption patterns -determinants of household demand for different assets (i.e. money, stocks)

Main rationale for the questionnaire (3) Some of these insights can currently be adequately obtained in some euro area countries, but euro area analysis is not possible Comparisons across countries are difficult or impossible due to little cross-country comparability of existing data and lack of data in some countries Important complement to other micro data (balance sheet data, other surveys) and euro area macro data

Existing country surveys Austria: (Austrian National Bank) Survey on Household Financial Wealth in 2004 Finland: (Statistics Finland) Household wealth survey France: ( INSEE) “Enquête de Patrimoine” Germany: wealth module in SOEP (DIW) and SAVE Greece: (Bank of Greece) household survey Italy: (Banca d’Italia) Survey of Italian households’ income and wealth The Netherlands: (DNB) Household survey Spain: (Banco de España) Survey of household finances Portugal: (Banco de Portugal and the Portuguese Statistical Institute) Survey on households’ wealth and indebtedness

2006 Task Force All euro area central banks represented Developed the rationale for the questionnaire Reference list: a detailed set of information that should be asked for in a questionnaire A set of guiding principles: best practices in survey design Result: Governing Council decided to set up a network on HFC

HFCN Network mandated by the Governing Council to develop a proposal for a survey on household finance and consumption for euro area wide application This proposal will include: -a common questionnaire, -modalities for its implementation -an estimate of the associated costs. -Decision to hold the survey will be based on this proposal

HFCN: composition ECB + Eurosystem National Central Banks Participants from Eurostat, INSEE, Statistics Finland Consultants: Arthur Kennickell (Board of Governors of the Federal Reserve) Luigi Guiso (European University Institute) Michael Haliassos (Goethe University Frankfurt)

A common questionnaire Objective: one data set for the euro area –Common questionnaire (including common ordering of questions) as far as possible, based on reference list –Limited number of additional country-specific questions possible –Countries with existing surveys should strive to gradually converge to the benchmark so as to improve comparability over time

Common definitions Definitions should be consistent as much as possible with already existing standards and definitions, e.g. ESA95 Consistency with other relevant European household surveys, such as EU SILC, is aimed at Has the advantage of enabling the interaction between micro (survey) data and macro statistics or between different sets of survey data Translation of common definitions into national languages will be performed in NCBs

First draft common questionnaire Full version covers: core items: should be common to all country questionnaires non-core items: should be common to the questionnaires of those countries that decide to also cover these items In addition: countries may wish to add non- harmonised country-specific questions

Outline of the Eurosystem questionnaire

Pre-testing/ Pilot Help to find out parts of the questionnaire / formulations / order of questions tricky to respondents. Full version of the questionnaire envisaged by summer Over the summer and autumn of 2007, a number of small-scale tests planned: Belgium, France, Germany and Ireland + informal pretests by some other NCBs Larger-scale pilot planned by Bundesbank Spring 2008

Implementation issues/ Sample design Sample size (results per country versus euro area) Sampling method Over-sampling of wealthy households Panel vs cross-section samples Non-response handling Survey frequency/timing Survey mode/ interviewing process: CAPI/CAWI/CATI Ex-post harmonization to be minimised by ex-ante harmonisation

Conclusion Ongoing development of Eurosystem questionnaire Report to Governing Council in autumn 2008 First survey targeted in 2009? New information source for euro area policy makers Intention to make data publicly available for research and policy purposes

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