1. NATIONAL STATISTICAL COORDINATION BOARD International Workshop on Household Income, Consumption & Full Accounting of the Household Sector, Beijing, China RJ Talento /26-28 March 2012 Presented by Raymundo J. Talento Director, Economic Statistics Office National Statistical Coordination Board International Workshop on household Income, Consumption and Full Accounting of the Household Sector Beijing, China 26-28 March 2012 ESTIMATION OF THE HOUSEHOLD SECTOR (Philippine Case)

2. NATIONAL STATISTICAL COORDINATION BOARD International Workshop on Household Income, Consumption & Full Accounting of the Household Sector, Beijing, China RJ Talento /26-28 March 2012 2 Outline of the Prensentation I.Introduction II.Scope and Coverage III.Data Sources IV.Estimation Methodology V. Issues/concerns

3. NATIONAL STATISTICAL COORDINATION BOARD International Workshop on Household Income, Consumption & Full Accounting of the Household Sector, Beijing, China RJ Talento /26-28 March 2012 3 Measurement of GDP Three approaches in GDP Measurement 1.Production Approach, GDP (P) 2. Expenditure Approach, GDP (E) 3. Income Approach, GDP (I) I. Introduction

4. NATIONAL STATISTICAL COORDINATION BOARD International Workshop on Household Income, Consumption & Full Accounting of the Household Sector, Beijing, China RJ Talento /26-28 March 2012 4 1. Production Approach, GDP (P) Unduplicated sum of all the goods and services produced in the domestic economy (by resident producers) Measurement of GDP by industrial origin Measurement of GDP contn… Formula: GDP (P) = GVA where: GVA = Gross Value Added = Gross Output Less Intermediate Inputs I. Introduction

5. NATIONAL STATISTICAL COORDINATION BOARD International Workshop on Household Income, Consumption & Full Accounting of the Household Sector, Beijing, China RJ Talento /26-28 March 2012 5 2. Expenditure Approach, GDP (E) Sum of the final uses of goods and services (all except intermediate consumption) measured at purchasers prices, less the value of imports of goods and services Measurement of GDP contn… Formula: GDP (E) = HFCE + GFCE+ GDCF + X – M where: HFCE= Household Final Consumption Expenditure GFCE= Government Final Consumption Expenditure GDCF= Gross Domestic Capital Formation X= Exports M= Imports I. Introduction

6. NATIONAL STATISTICAL COORDINATION BOARD International Workshop on Household Income, Consumption & Full Accounting of the Household Sector, Beijing, China RJ Talento /26-28 March 2012 6 3. Income Approach, GDP (I) Sum of primary incomes distributed by resident producer units Measurement of GDP contn… Formula: GDP (I) = CE + D + T – S + OS where: CE= Compensation of Employees D= Depreciation T= Taxes (products/production) S= Subsidies OS= Operating Surplus I. Introduction

7. NATIONAL STATISTICAL COORDINATION BOARD International Workshop on Household Income, Consumption & Full Accounting of the Household Sector, Beijing, China RJ Talento /26-28 March 2012 7 3. Income Approach, GDP (I) By institutional units. In the present PSNA these are : Non-Financial Financial Government; and Households and unincorporated enterprises, including non-profit institutions serving households Also the Rest of the World (ROW) – viewed as the grouping of all non-resident units. Measurement of GDP contn… I. Introduction

8. NATIONAL STATISTICAL COORDINATION BOARD International Workshop on Household Income, Consumption & Full Accounting of the Household Sector, Beijing, China RJ Talento /26-28 March 2012 8 Gross National Income (GNI) Covers (Income from) Production within the domestic territory (GDP), including production from the rest of the world (NFIA) provided by residents of the Philippines Measurement of GNI (GNP) Formula: GNP = GDP + NPIA where: GDP= Gross Domestic Product NPIA= Net Primary Income From Abroad I. I. Introduction

9. NATIONAL STATISTICAL COORDINATION BOARD International Workshop on Household Income, Consumption & Full Accounting of the Household Sector, Beijing, China RJ Talento /26-28 March 2012 9 THUS, THE PSNA GENERATES PRODUCTION, EXPENDITURES AND INCOME ESTIMATES I. Introduction

10. NATIONAL STATISTICAL COORDINATION BOARD International Workshop on Household Income, Consumption & Full Accounting of the Household Sector, Beijing, China RJ Talento /26-28 March 2012 10 HFCE consists of actual and imputed expenditures of households for the purpose of acquiring individual consumption of goods & services. Includes: - Individual and institutional households (HHs) - Non-profit institutions serving households (NPISH): II. Scope and Coverage

11. NATIONAL STATISTICAL COORDINATION BOARD International Workshop on Household Income, Consumption & Full Accounting of the Household Sector, Beijing, China RJ Talento /26-28 March 2012 11 HFCE – classified according to purpose - based on the Classification of Individual Consumption according to Purpose (COICOP) as recommended by the 2008 SNA II. Scope and Coverage

12. NATIONAL STATISTICAL COORDINATION BOARD International Workshop on Household Income, Consumption & Full Accounting of the Household Sector, Beijing, China RJ Talento /26-28 March 2012 12 HFCE – includes: 1.Food and Non-alcoholic Beverages 2.Alcoholic Beverages and Tobacco 3.Clothing and Footwear 4.Housing, Water, Electricity, Gas and Other Fuels 5.Furnishings, Household Equipment and Routine Household Maintenance 6. Health 7.Transport 8.Communication 9.Recreation and Culture 10. Education 11. Restaurants and Hotels 12. Miscellaneous Goods and Services II. Scope and Coverage

13. NATIONAL STATISTICAL COORDINATION BOARD International Workshop on Household Income, Consumption & Full Accounting of the Household Sector, Beijing, China RJ Talento /26-28 March 2012 13 Data/information used : -Family Income and Expenditures Survey (FIES) of NSO -Consumer Price Index (CPI) of NSO -2000 Input-Output (I-O) Table of NSCB -Total output of industry sectors from the estimates of the National Accounts of the NSCB -Foreign Trade Statistics (FTS) of NSO -Administrative-based data of various agencies (i.e. volume & value of removals for cigars, cigarettes & alcoholic drinks from the BIR) III. Data Sources

14. NATIONAL STATISTICAL COORDINATION BOARD International Workshop on Household Income, Consumption & Full Accounting of the Household Sector, Beijing, China RJ Talento /26-28 March 2012 14 2000 Benchmark Year - adopted as initial estimate the 2000 I-O estimates of HFCE, with each HFCE I-O code/description classified according to COICOP. IV. Methodology

15. NATIONAL STATISTICAL COORDINATION BOARD International Workshop on Household Income, Consumption & Full Accounting of the Household Sector, Beijing, China RJ Talento /26-28 March 2012 15 Non-benchmark Year (1998-1999, 2001-2010) -the 2000 benchmark estimate of HFCE by sub-component was extrapolated using the trend of the gross output of related industry sector -estimates are reconciled with the other sectors through the supply and use table -it is further validated using the expenditure structure derived from the FIES. IV. Methodology

16. NATIONAL STATISTICAL COORDINATION BOARD International Workshop on Household Income, Consumption & Full Accounting of the Household Sector, Beijing, China RJ Talento /26-28 March 2012 16 SHOULD THE INCOME AND EXPENDITURES DATA OF THE PSNA AND THE FIES BE CONSISTENT? RECONCILED? V. Issues & Concerns

17. NATIONAL STATISTICAL COORDINATION BOARD International Workshop on Household Income, Consumption & Full Accounting of the Household Sector, Beijing, China RJ Talento /26-28 March 2012 17 is a household survey being conducted by the NSO every three years Provides data on family income and expenditures which include among others levels of consumption by item of expenditure as well sources of income in cash and in kind Source of weights for the CPI Used for computing poverty incidence Used for analyzing income distribution Used as an indicator for NA purposes What is the FIES? V. Issues & Concerns

18. NATIONAL STATISTICAL COORDINATION BOARD International Workshop on Household Income, Consumption & Full Accounting of the Household Sector, Beijing, China RJ Talento /26-28 March 2012 18 V. Issues & Concerns The FIES does not collect income/expenditures data from Non-Financial Institution Financial Institution Government Non-profit institutions serving households Rest of the World (ROW)

19. NATIONAL STATISTICAL COORDINATION BOARD International Workshop on Household Income, Consumption & Full Accounting of the Household Sector, Beijing, China RJ Talento /26-28 March 2012 19 V. Issues & Concerns In the PSNA, the Transactors (Institutional Sectors) of the Economy are: Non-Financial Institution Financial Institution Government; and Households and unincorporated enterprises, including non-profit institutions serving households Also Rest of the World (ROW) – the grouping of all non-resident units.

20. NATIONAL STATISTICAL COORDINATION BOARD International Workshop on Household Income, Consumption & Full Accounting of the Household Sector, Beijing, China RJ Talento /26-28 March 2012 20 V. Issues & Concerns Therefore, if one must compare income data from the PSNA and the FIES, the closest one may look for comparability is THE HOUSEHOLD SECTOR!

21. NATIONAL STATISTICAL COORDINATION BOARD International Workshop on Household Income, Consumption & Full Accounting of the Household Sector, Beijing, China RJ Talento /26-28 March 2012 21 IS FIES INCOME = PSNA INCOME OF THE HOUSEHOLD SECTOR? V. Issues & Concerns

22. NATIONAL STATISTICAL COORDINATION BOARD International Workshop on Household Income, Consumption & Full Accounting of the Household Sector, Beijing, China RJ Talento /26-28 March 2012 22 FIES INCOME REFERS TO INCOME IN CASH AND IN KIND RECEIVED BY THE HHs FIES INCOME INCLUDES (FIES QUESTIONNAIRE): PART III: INCOME AND OTHER RECEIPTS PART IV: ENTREPRENEURIAL ACTIVITIES PART II: EXPENDITURE AND OTHER DISBURSEMENTS ( RECEIVED AS GIFTS) V. Issues & Concerns

23. NATIONAL STATISTICAL COORDINATION BOARD International Workshop on Household Income, Consumption & Full Accounting of the Household Sector, Beijing, China RJ Talento /26-28 March 2012 23 FIES INCOME INCLUDES: V. Issues & Concerns Salaries and wages from employment Net share of crops, fruits and vegetables produced or livestock and poultry raised by other households Cash receipts, gifts, support, relief and other forms of assistance from abroad Cash receipts, support, assistance and relief from domestic source Rentals received from non-agricultural lands, buildings, spaces and other properties Interest

24. NATIONAL STATISTICAL COORDINATION BOARD International Workshop on Household Income, Consumption & Full Accounting of the Household Sector, Beijing, China RJ Talento /26-28 March 2012 24 FIES INCOME INCLUDES contn: V. Issues & Concerns Pension and retirement, workmens compensation and social security benefits Dividends from investment Other sources of income not elsewhere classified Family Sustenance Activities Total Income from Entrepreneurial Activities Goods and Services Received as gift Imputed Rental Value of Owner-Occupied Dwelling Units

25. NATIONAL STATISTICAL COORDINATION BOARD International Workshop on Household Income, Consumption & Full Accounting of the Household Sector, Beijing, China RJ Talento /26-28 March 2012 25 PSNA HH INCOME ALSO BASICALLY REFERS TO INCOME IN CASH AND IN KIND RECEIVED BY THE HOUSEHOLD SECTOR PSNA HH INCOME = COMPENSATION + OPERATING SURPLUS + PROPERTY INCOME + TRANSFERS V. Issues & Concerns

26. NATIONAL STATISTICAL COORDINATION BOARD International Workshop on Household Income, Consumption & Full Accounting of the Household Sector, Beijing, China RJ Talento /26-28 March 2012 26 V. Issues & Concerns SOURCES OF DIFFERENCES 1.COVERAGE 2.CONCEPTUAL/DEFINITION OF INCOME 3.METHODOLOGICAL ( NOS OF HHS) 4.DATA-RELATED

27. NATIONAL STATISTICAL COORDINATION BOARD International Workshop on Household Income, Consumption & Full Accounting of the Household Sector, Beijing, China RJ Talento /26-28 March 2012 27 Differences between the national accounts of the NSCB and the income data from the FIES of the NSO. In terms of COVERAGE: PSNAFIES Household & Unincorporated Enterprises Individual Households Institutional Households Non-profit Institution Serving Household V. Issues & Concerns

28. NATIONAL STATISTICAL COORDINATION BOARD International Workshop on Household Income, Consumption & Full Accounting of the Household Sector, Beijing, China RJ Talento /26-28 March 2012 28 Differences between the national income accounts of the NSCB and the income data from the FIES of the NSO. In terms of TYPE OF INCOME covered: NA covers income of household derived from engaging in unincorporated enterprises, compensation of employee, property income from investments of assets, depreciation from the use of assets, transfers, taxes, subsidies V. Issues & Concerns

29. NATIONAL STATISTICAL COORDINATION BOARD International Workshop on Household Income, Consumption & Full Accounting of the Household Sector, Beijing, China RJ Talento /26-28 March 2012 29 Differences between the national income accounts of the NSCB and the income data from the FIES of the NSO. In terms of TYPE OF INCOME covered: FIES Includes income defined in the NIA but excludes items on depreciation and indirect taxes or subsidies V. Issues & Concerns

30. NATIONAL STATISTICAL COORDINATION BOARD International Workshop on Household Income, Consumption & Full Accounting of the Household Sector, Beijing, China RJ Talento /26-28 March 2012 30 Differences between the national income accounts of the NSCB and the income data from the FIES of the NSO. In terms of METHODOLOGY : PSNA Net Operating Surplus of Households is residually calculated FIES Total Income from Entrepreneurial Activities V. Issues & Concerns

31. NATIONAL STATISTICAL COORDINATION BOARD International Workshop on Household Income, Consumption & Full Accounting of the Household Sector, Beijing, China RJ Talento /26-28 March 2012 31 Differences between the national income accounts of the NSCB and the income data from the FIES of the NSO. In terms of DATA-RELATED DIFFERENCES : FIES HH response based on recall - underreporting/overreporting of income/expenditures PSNA Data comes from different sources and estimates are validated through the SUT V. Issues & Concerns

32. NATIONAL STATISTICAL COORDINATION BOARD International Workshop on Household Income, Consumption & Full Accounting of the Household Sector, Beijing, China RJ Talento /26-28 March 2012 32 Thank You! www.nscb.gov.ph info@nscb.gov.ph