1. A Eurosystem Household Finance and Consumption Survey: Developing the questionnaire for the planned survey Panagiota Tzamourani and Carlos Sánchez Muñoz Q2008, Rome, July 2008

2. 2 The Household Finances and Consumption Survey (HFCS) Micro data essential to study household financial behaviour, impact of monetary policy, effect of shocks Similar surveys exist in some euro area countries only – lack of data or data non-harmonised EU surveys either do not cover wealth and liabilities (eg EU-SILC) or target only parts of the population (eg SHARE)

3. 3 The Household Finances and Consumption Survey – a proposal Eurosystem ‘Household Finance and Consumption Network’ (HFCN): Proposal for a survey on HFC for the euro area Proposal should include: –a common questionnaire –modalities for the survey implementation –an estimate of the associated costs The survey has not yet been approved

4. 4 This presentation: on the HFCS questionnaire Topics Questionnaire challenges –Due to the survey topic –Due to the international nature of the survey Development process –pretests Resolutions –Content and definitions –Structure and wording

5. 5 Questionnaire to cover Real assets and financial wealth Liabilities and credit constraints Income Consumption Pensions and insurance policies Intergenerational transfers Demographics and employment [Payment habits]

6. 6 Data requirements Data adequate to address key issues for monetary policy analysis, financial stability analysis and research Consistency with macro data (National Accounts, banking statistics) Consistency with other European survey data (eg. SILC)

7. 7 Challenges posed by the survey topic Detail required, but questions sensitive, questionnaire can become too long Information required ‘difficult’, eg portfolio composition: find alternative ways of getting information, or, simply resign (!) Translate economic concepts and statistical classifications into everyday language Ensure a natural flow of the questionnaire, relax respondents after demanding sections

8. 8 Challenges posed by the international nature of the survey Different structure of household assets (real/financial): level of detail required different in each country Different prevalence and use of loan types (mortgage collaterals; credit cards) Understanding and knowledge of common concepts varies, eg Salaries: Gross or net, monthly or annual Reference period for income and wealth (more general: connected with the use of tax records, time period of fieldwork) Differences in the characteristics and labelling of financial products, eg Sight accounts (current accounts, saving accounts) Individual retirement accounts or life insurance Differences in the pension systems across countries Social security /occupational pensions Comparability with existing time series

9. 9 The process of developing the questionnaire May-July 2007: drafting questionnaire, written procedure In parallel: Drafting of the handbook of definitions September 2007: Irish pretest (60 cases, spread over 3 phases) November 2007: Revision based on pretest results and written procedure January 2008: Greek pretest (30 Cases) of new version February 2008: revision and streamlining from ‘Questionnaire subgroup’ Spring 2008: –German pretest (20+180 cases) –Belgian pretest (40 cases) –Portuguese pretest (80 NCB staff) Summer 2008: final revision

10. 10 Questionnaire pretests: aims Ascertain appropriateness of questionnaire content Test understanding of the questions and ease with which questions can be answered Time each phase of interview ‘Core’ and ‘non-core’ (optional) components Test impact of sectioning ordering Test appropriateness of reference person for household questions // feasibility of getting responses from all adults Phrasing in own language Implementation issues, e.g. survey letter, non-response, interviewers’ training, understanding and performance, oversampling the wealthy

11. 11 Questionnaire pretests: some lessons (1) Ireland (September 2007, 60 cases, PAPI) July version comprising core and non-core questions unworkably long Perceived duplication of income questions (last years’ annual income and current monthly income) Lack of knowledge about pensions held Interest rates not known Self-employed often found income difficult to report Popular questions: consumption, attitudes, payment habits (non-core) Resented questions: parents’ occupation, credit constraints, cash in the house

12. 12 Questionnaire pretests: some lessons (2) Germany (Spring 2008, 200 achieved interviews, CAPI + self-completion) Questionnaire overall well received Fine-tuning needed: modify some questions and lists of answer categories Belgium (Spring 2008, 40 cases, PAPI) Questions overall well received - very few criticism on the questions, except Income and pension sections inappropriate for many children above 16 Questions on mutual funds considered intrusive

13. 13 The HFCS approach Overall: output oriented approach, i.e. countries bound to common definitions rather than questionnaire Streamlined ‘core’ questionnaire /output variables, to be complemented by ‘non-core’ and country specific variables, so that –average interview length about 1 hour –basic requirements of data provided covered –concepts applicable and relevant to all countries Blue-print common questionnaire to be used in countries with new surveys

14. 14 HFCS – current questionnaire structure Pre-interview: selection of respondent/ Household listing Demographics Real assets and their financing Other liabilities / Credit constraints Private businesses / Financial assets Employment Income Pensions and insurance policies Intergenerational transfers / gifts Consumption Post-interview: interviewer debriefing Pre/post interviewIndividual questionsHousehold questions

15. 15 HFCS data issues: comparability Comparability with National Accounts –Countries to make the distinction between producer households and quasi corporations –Calculation of some ESA95 wealth components; further comparability possible by adding ‘non-core’ questions Comparability with other survey data: –Income: in line with Canberra report recommendations –Definitions to the extent possible consistent with EU-SILC and Eurostat's Concepts and Definitions Database, the OECD glossaries and other standards

16. 16 HFCS data issues: reference period Reference period for income and wealth: optimal for wealth: current status for (annual) income: –Last calendar year Accurate: respondents could consult records, e.g. tax files Could be out-of-date, particularly if fieldwork after the middle of the year Inconsistent with wealth –Last twelve months (chosen) Closer to fieldwork Consistent with wealth

17. 17 HFCS data issues: pensions, consumption Pensions › Only indicator variables: social insurance/ private plans, contributions Consumption › Only indicator variables: Money spent on food outside home, money spent on food at home

18. 18 HFCS: ease respondents’ burden Use a communication strategy that creates trust and stresses confidentiality and anonymity Streamlined questionnaire Add some ‘soft’ questions to relax respondents Allow households to report what they know best (eg monthly amounts for some income types)

19. 19 Conclusions and next steps Overall current questionnaire well received Countries with existing surveys will be using their own questionnaire, with amendments so that they can provide the ‘core’ variables New surveys will use Eurosystem questionnaire Governing Council will decide on the proposal this autumn First countries to implement survey in 2009

20. Thank you