A prospective euro area survey on household finances and consumption: Policy needs and preparatory work * Sébastien Pérez-Duarte – joint with Jirka Slacalek ECB The 2008 World Congress on National Accounts and Economic Performance Measures for Nations (*) This presentation reflects the views of the author and not necessarily those of the ECB or of the members of the Household Finance and Consumption Survey Network

Measuring household finances: why? Aggregate data is not enough for central banks Households are heterogeneous, and behave heterogeneously Distribution of most assets is skewed

The challenge of the measure of wealth The surveys are long (need to collect lots of information) The surveys touch sensitive issues (wealth, debt, income) Households do not want to participate Households may not want to answer some questions… which are the ones we want to get The households that do not respond are the ones we would most want to interview The households that would change most the results are the ones harder to get

Policy uses Distribution of wealth –Rising aggregate debt has several possible causes Transmission of shocks –Marginal propensity to consume out of wealth Microsimulation –Model of behaviour of individual entities –“Representative” agent not very representative Pensions –Ageing populations –Pay-as-you-go pension systems

Central banks and wealth surveys Many examples –US SCF –Italy SHIW –Spain EFF –But also Austria, the Netherlands, Portugal,… As well as non-central banks –France –Finland Central banks have particular objectives, and there are externalities in the involvement (including sample design)

The Eurosystem network for a wealth survey Started in 2006 Euro area central banks (NCBs and ECB), with some national statistical institutes and research centres, and three consultants Objective: launch a euro area wide survey on household finance and consumption Ensure comparability as much as possible (in definitions, design and implementation)

Strengths and constraints Already existing surveys Large cross-country differences –Institutional –Demographic –Attitudes to surveys –Attitudes to wealth

Blueprint euro area questionnaire Assets Liabilities Consumption Income Intergenerational transfers Attitudes and expectations Pension plans Employment Demographics

And now … Before I take your questions, I would like to ask a few questions myself … –If you could please tell me, how much is your main residence worth? –Do you have any mortgages taken on this residence, and if yes, how much is still owed? –Do you have any other properties? Please list their use and their value, as well as any mortgage you could have on them. –Indicate here all your bank accounts and their current balance, as well as any shares and money market funds you could have –Have you been late with your credit card payments? Have you been denied credit, or have you not applied for credit for fear of being turned down?