ESTIMATION OF THE HOUSEHOLD SECTOR Philippine Case Presented

ESTIMATION OF THE HOUSEHOLD SECTOR (Philippine Case) 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 International Workshop on Household Income, Consumption & Full Accounting of the Household Sector , Beijing, China RJ Talento /26 -28 March 2012 NATIONAL STATISTICAL COORDINATION BOARD

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

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

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

I. Introduction ØMeasurement of GDP cont’n… 2. Expenditure Approach, GDP (E) v. Sum of the final uses of goods and services (all except intermediate consumption) measured at purchaser’s prices, less the value of imports of goods and services 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 5 International Workshop on Household Income, Consumption & Full Accounting of the Household Sector , Beijing, China RJ Talento /26 -28 March 2012 NATIONAL STATISTICAL COORDINATION BOARD

I. Introduction ØMeasurement of GDP cont’n… 3. Income Approach, GDP (I) v. Sum of primary incomes distributed by resident producer units Formula: GDP (I) = CE + D + T – S + OS where: CE D T S OS 6 = Compensation of Employees = Depreciation = Taxes (products/production) = Subsidies = Operating Surplus International Workshop on Household Income, Consumption & Full Accounting of the Household Sector , Beijing, China RJ Talento /26 -28 March 2012 NATIONAL STATISTICAL COORDINATION BOARD

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

I. I. Introduction ØMeasurement of GNI (GNP) v. 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 Formula: GNP = GDP + NPIA where: GDP = Gross Domestic Product NPIA = Net Primary Income From Abroad 8 International Workshop on Household Income, Consumption & Full Accounting of the Household Sector , Beijing, China RJ Talento /26 -28 March 2012 NATIONAL STATISTICAL COORDINATION BOARD

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

II. Scope and Coverage 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): 10 International Workshop on Household Income, Consumption & Full Accounting of the Household Sector , Beijing, China RJ Talento /26 -28 March 2012 NATIONAL STATISTICAL COORDINATION BOARD

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

II. Scope and Coverage HFCE – includes: 1. 2. 3. 4. Food and Non-alcoholic Beverages Alcoholic Beverages and Tobacco Clothing and Footwear 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 12 International Workshop on Household Income, Consumption & Full Accounting of the Household Sector , Beijing, China RJ Talento /26 -28 March 2012 NATIONAL STATISTICAL COORDINATION BOARD

III. Data Sources 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) 13 International Workshop on Household Income, Consumption & Full Accounting of the Household Sector , Beijing, China RJ Talento /26 -28 March 2012 NATIONAL STATISTICAL COORDINATION BOARD

IV. Methodology 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. 14 International Workshop on Household Income, Consumption & Full Accounting of the Household Sector , Beijing, China RJ Talento /26 -28 March 2012 NATIONAL STATISTICAL COORDINATION BOARD

IV. Methodology 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. 15 International Workshop on Household Income, Consumption & Full Accounting of the Household Sector , Beijing, China RJ Talento /26 -28 March 2012 NATIONAL STATISTICAL COORDINATION BOARD

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

V. Issues & Concerns What is the FIES? Øis a household survey being conducted by the NSO every three years ØProvides 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 ØSource of weights for the CPI ØUsed for computing poverty incidence ØUsed for analyzing income distribution ØUsed as an indicator for NA purposes 17 International Workshop on Household Income, Consumption & Full Accounting of the Household Sector , Beijing, China RJ Talento /26 -28 March 2012 NATIONAL STATISTICAL COORDINATION BOARD

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

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

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

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

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

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

V. Issues & Concerns ØFIES INCOME INCLUDES cont’n: ØPension and retirement, workmen’s compensation and social security benefits ØDividends from investment ØOther sources of income not elsewhere classified ØFamily Sustenance Activities ØTotal Income from Entrepreneurial Activities ØGoods and Services Received as gift ØImputed Rental Value of Owner-Occupied Dwelling Units 24 International Workshop on Household Income, Consumption & Full Accounting of the Household Sector , Beijing, China RJ Talento /26 -28 March 2012 NATIONAL STATISTICAL COORDINATION BOARD

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

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

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

V. Issues & Concerns 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 Øcovers 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 28 International Workshop on Household Income, Consumption & Full Accounting of the Household Sector , Beijing, China RJ Talento /26 -28 March 2012 NATIONAL STATISTICAL COORDINATION BOARD

V. Issues & Concerns 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 ØIncludes income defined in the NIA but excludes items on depreciation and indirect taxes or subsidies 29 International Workshop on Household Income, Consumption & Full Accounting of the Household Sector , Beijing, China RJ Talento /26 -28 March 2012 NATIONAL STATISTICAL COORDINATION BOARD

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

V. Issues & Concerns 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 ØHH response based on recall underreporting/overreporting of income/expenditures PSNA ØData comes from different sources and estimates are validated through the SUT 31 International Workshop on Household Income, Consumption & Full Accounting of the Household Sector , Beijing, China RJ Talento /26 -28 March 2012 NATIONAL STATISTICAL COORDINATION BOARD

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