Workshop on Measuring Household Production, IATUR 2014 Conference, Turku 29 July 2014

1. Consumption in HHSA
Katri Soinne
Statistics Finland

2. Content
 Demand in SNA
 Intermediate consumption
 Final consumption
 Gross fixed capital formation
 COICOP and durability classes
 Calculation of household consumption expenditure
 From household final consumption in core system to
classification of household consumption in HHSA
2IATUR - Workshop on Household Satellite 29 July 2014

3. Basic idea: supply = demand
Y + M = IC + C + G + I + X
where
Y = output
M = imports
IC = intermediate consumption
C = private consumption
G = government consumption
I = gross fixed capital formation (investments)
X = exports
3IATUR - Workshop on Household Satellite 29 July 2014

4. SNA: intermediate consumption
 Definition: intermediate consumption consists of goods and
services consumed as inputs by a process of production
(excluding fixed assets); goods and services are either
transformed or used up by production process
 Examples: raw materials, semi-finished goods, fuels and
energy, small tools, purchased services, repairs and
maintenance
 Delineation with investments: duration and value
 For households: intermediate consumption exists only in
actions that are included as production in SNA
4IATUR - Workshop on Household Satellite 29 July 2014

5. SNA: final consumption
 Definition: final consumption expenditure consists of
expenditure on goods and services that are used for the
direct satisfaction of individual needs or wants or the
collective needs of members of the community
 Both private and government consumption
 Private consumption = household consumption expenditure
+ final consumption of NPISH (=non-profit institutions
serving households)
 For households everything (except dwellings) bought as
consumers is final consumption, regardless the duration or
value
5IATUR - Workshop on Household Satellite 29 July 2014

6. SNA: gross fixed capital formation
 Definition: GFCF consists (acquisitions less disposals) of
fixed assets during a given period; fixed assets are
produced assets used in production for more than one year
 The use of fixed capital is included into the national
accounts calculation as “consumption of fixed capital”
(comparable to depreciation)
 Delineation with intermediate consumption: duration, value
 For households as consumers: only dwellings are GFCF,
everything else is final consumption in the core system
6IATUR - Workshop on Household Satellite 29 July 2014

7. Final consumption or intermediate consumption or GFCF?
7IATUR - Workshop on Household Satellite 29 July 2014
Action Final
consumption
Intermediate
consumption
Gross fixed capital
formation
Potato farmer buys pesticides
Mr Smith buys pesticides for his roses
Restaurant buys potatoes
Mrs Smith buys potatoes for her family
Ms Williams buys a car for herself
A restaurant buys a car for the company
Company buys tickets to a concert for it’s
customers
You buy tickets to the same concert (as the
company) for the rest of your family
Government is building a library
Household is buying an apartment

8. COICOP = Classification of Individual Consumption
according to Purpose
 Internationally agreed classification for household
consumption (divisions 01-12)
 Coded according to hierarchy:
 2digit level divisions (07 Transport)
 3-digit level groups (07.1 Purchase of vehicles)
 4-digit level classes (07.1.1 Motor cars (D))
 5-digit level classes (so far national, in the future EU-
level classification on 5-digit level, as well)
 Includes classification according to durability
8IATUR - Workshop on Household Satellite 29 July 2014

9. Durability classes in COICOP
 Four durability classes:
 ND = non-durable goods (milk)
 SD = semi-durable goods (shoes)
 D = durable goods (car)
 S = services (restaurants)
 COICOP-classing (including the information about
durability) can be used in HHSA when re-dividing final
consumption into intermediate consumption, final
consumption and gross fixed capital formation
9IATUR - Workshop on Household Satellite 29 July 2014

10. Calculation of household consumption expenditure
 Main source: Household Budget Survey
 Information about household consumption
 Not available yearly at least in Finland
 Comparisons with other sources used
 Years between HBS’s
 Methodological calculations
 Other sources: statistics on turnover of trade, national
accounts production calculations, registrations, CPI
(consumer price index), transportation statistics etc.
10IATUR - Workshop on Household Satellite 29 July 2014

11. Households in satellite accounts:
intermediate consumption
 Goods and services used as inputs in the production
 Examples
 food that does not as such constitute a snack or meal
 food that needs processing
 household textiles (as accessories for housing services)
 repairs of machines used in household production
 More intermediate consumption => the output is growing
(input approach)
11IATUR - Workshop on Household Satellite 29 July 2014

12. Households in satellite accounts:
gross fixed capital formation
 Fixed assets used in production for more than one year
 Durability class D (durables)
 Examples:
 ovens, washing machines
 cooking pans, table cutlery
 More gross fixed capital formation => more consumption of
fixed capital => the output is growing (input approach)
12IATUR - Workshop on Household Satellite 29 July 2014

13. Households in satellite accounts:
final consumption
 Goods and services as such for the direct satisfaction of
individual needs or wants
 Services that are purchased as substitute for household
production
 Examples
 leisure
 laundry services
 fruits
 In HHSA extended accounts includes also the gross value
added of household production minus GFCF
13IATUR - Workshop on Household Satellite 29 July 2014

14. Division of consumption in HHSA:
Goods and services Final Inter-
mediate
GFCF
Banana
Bed
Bike
Bread
Cake mix
Car
Carpet
Contact lenses
Eggs
Insurance
14IATUR - Workshop on Household Satellite 29 July 2014

15. Division of consumption in HHSA:
Goods and services Final Inter-
mediate
GFCF
Laptop
Pet food
Potatoes
Ready-to-eat meal
Refrigerator
Shampoo
Shoes
Towel
Train ticket
T-shirt
15IATUR - Workshop on Household Satellite 29 July 2014

16. Consumption in HHSA and SNA
 In SNA for households everything (except housing) is final
consumption
 In household satellite account we divide SNA final
household consumption into intermediate consumption,
final consumption and gross fixed capital formation
 Division of consumption: national way (for example bread)
or internationally agreed division?
=> Using input method intermediate consumption and
CFC (which is related to gross fixed capital formation)
are calculated into the household production
16IATUR - Workshop on Household Satellite 29 July 2014