1 November 6-10, th NBS-OECD workshop on national accounts Session 7 - Alain GALLAIS Towards a better measure of non market output The OECD non market project Report of the joint OECD/UK/Norway workshop (London, October, 3-5, 2006)

2 November 6-10, th NBS-OECD workshop on national accounts Session 7 - Alain GALLAIS The OECD non market project This project, focussed on education and health especially, both in temporal and spatial dimensions, was presented by OECD at the 2005 meeting of the Committee on Statistics. INSEE has assigned Alain GALLAIS to coordinate this project in OECD, for 18 months (April > September 2007). workshop in London, 3-5 October 2006, co-hosted by ONS and the government of Norway. Attendance of more than 160 experts of National Accounts, PPP, education, health and public services efficiency fields. Next workshop in Paris, 7-8 June workshop in London Possibility of a « transatlantic gap » : the US and Canada still apply input measures. Impact of 0.25% of GDP growth/year ?

3 November 6-10, th NBS-OECD workshop on national accounts Session 7 - Alain GALLAIS The context : SNA « In principle, volume indices may always be compiled directly by calculating a weighted average of the quantity relatives for the various goods or services produced as outputs using the values of these goods and services as weights. Exactly the same method may be applied even when the output values have been estimated on the basis of their costs of production. » « There is no mystique about non-market health or education services which make changes in their volume more difficult to measure than volume changes for other types of output, such as financial or business services or fixed tangible assets. Moreover, changes in their volume are also needed in order to be able to measure volume changes for the actual consumption of households. The same principles apply to the measurement of consumption as to production. »

4 November 6-10, th NBS-OECD workshop on national accounts Session 7 - Alain GALLAIS The context : the European handbook Education« the quantity of teaching received by the students, adjusted to allow for the qualities of the services provided, for each type of education » « the transfer of knowledge, successfully or not » Health « quantity of health care received by patients, adjusted to allow for the qualities of service provided, for each type of health care. » « The quantity of health care received by patients should be measured in terms of complete treatments ». pupil-hours or number of pupils class size, school inspections, scores ? by ISCED-97 number of treatments, or consultations, or first visits by providers, then by functional care, then by DRGs ?

5 November 6-10, th NBS-OECD workshop on national accounts Session 7 - Alain GALLAIS The context : the Atkinson review Principle A : “the measurement of government non-market output should, as far as possible, follow a procedure parallel to that adopted in the national accounts for market output.” Principle B : “the output of the government sector should in principle be measured in a way that is adjusted for quality, taking account of the attributable incremental contribution of the service to the outcome.” Principle C : “Account should be taken of the complementarity between public and private output, allowing for the increased real value of public services in an economy with rising real GDP”. 6 other principles (H on triangulation…) Note : the UK had already output methods, but sub-optimal ? good practice for quality adjustment

6 November 6-10, th NBS-OECD workshop on national accounts Session 7 - Alain GALLAIS The London workshop : scares and hopes about output methods National Accountants  Before, with hypothesis of null productivity, countries were comparable.  Now, with diversity on quality adjustment, countries could not be comparable any longer.  Data on productivity will be scrutinized by politicians  But new productivity is often negative !  Output is not outcome Policy makers  Before, output in NA was of no interest.  Interest of harmonization.  Now, NA could capture all outcomes useful for policy makers, with an official and consistent label, according to the vocation of NA.  Interest of explanations. Model of class size.  NA can only be one-dimensional

7 November 6-10, th NBS-OECD workshop on national accounts Session 7 - Alain GALLAIS The London workshop : education for PPP Output in NA (my point of view) OECD Education unit statistics Outcome for policy makers (ex of FR point of view) PISA national scores corrected on ESCS + time-lag PISA national average scores Level of knowledge Out of purpose of NAPISA national SDReduction of inequalities Externality ? Out of purpose Ancillary activities ? Citizenship Health Quality adjustment for upper second. vocational Rates of employment Insertion in Labour market Proposal of an output deduced from outcome indicators.

8 November 6-10, th NBS-OECD workshop on national accounts Session 7 - Alain GALLAIS Education : draft framework for PPP (M + NM) Recommendations of the handbook Finest detail of cycles Act. F.C. Num. pupils Quality index education Qual ancil. ISCED 0 Pre-school none Primary school – ISCED 1 Primary school PISA / PIRLS + TIMSS ? Special primary Lower secondary – ISCED 2 Secondary 1 st stage PISA Special secondary PISA Upper secondary - ISCED 3 general, pre-voc. PISA vocational PISA + emp. rate ? Post-sec. non tert. - ISCED 4 Post-secondary non tertiary PISA Higher education - ISCED 5 and 6 Long superior ISCED 5A Number of degrees and duration of studies. Short technical superior- ISCED 5B Advanced research qualification – ISCED 6 Other education

9 November 6-10, th NBS-OECD workshop on national accounts Session 7 - Alain GALLAIS Proposals (complaints) of DH for health output (UK) “Two treatments might have the same costs, but one might result in a major increase in health outcomes (longer life, or better quality life) while the other might have much smaller health gain. The aggregate measure of healthcare output should reflect the number of treatments with major health gain, rather than just taking account of current costs.” Use of value weights (QALY = Quality-Adjusted Life years) instead of cost weights. Use of mortality rates and waiting times. Use of « value weight » for statins : prevention better than curative care. Patient experience. Nothing in British NA yet. DRGs not fully convenient.

10 November 6-10, th NBS-OECD workshop on national accounts Session 7 - Alain GALLAIS New : Paris Health accounts meeting, 6 th of October, 2006 « Cost of illness » has been compared among a dozen of European countries, and Eurostat finds the results homogeneous and plausible. Diseases 1 st, providers 2 nd. « Cost of illness » is recommended for international comparisons, should be integrated in SHA, which would harmonize some conventions (fixed costs, prevention, collective purposes…) NL wants to calculate volume and price with this alternative framework (no methodology yet). But few data on QALY (main idea for quality adjustment).

11 November 6-10, th NBS-OECD workshop on national accounts Session 7 - Alain GALLAIS Possible content of the final « OECD best practices manual » Synthesis of national experiences and results Definitions, principles and terminology (input / output / outcome) Then by activities (education, health)  Definitions, principles, terminology  Review of (best) stratification and quantity indicators  Review of best quality indicators  Verification of consistency between market and non-market methods  Temporal formulas  Spatial framework and formulas  Suggestions for further developments For September 2007