alternative measures of real households’ disposable income tom evans household accounts...
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Alternative Measures of Real Households’ Disposable Income
Tom EvansHousehold Accounts [email protected]
Overview
• What is Disposable Income?
• Why are we looking at alternative measures?
• What adjustments have been made?
• Results!
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What is Disposable Income?
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Wages and Salaries
Interest Payments
Interest Payments
Direct Taxes
ResourcesUses
Conceptual Transactions
Imputed Rental
What is Disposable Income?
Transactions
What is RHDI?
• Take Gross Disposable Income for the Household Sector
• Apply an expenditure deflator
• Divide by the population
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Why are we looking at Alternative Measures?
• Key area of policy interest – living standards debate• Social surveys tend to be the leading sources of data
on disposable income• These sources collect a lot of detailed information but
are not especially timely
• Real Households’ Disposable Income (RHDI) is calculated within the system of National Accounts on a quarterly basis.
• It’s more timely but does have some conceptual differences to social survey sources
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Resources Uses Transaction Code Transaction CodeGross Operating Surplus B.2g Interest before FISIM allocation D.41g
Gross Mixed Income B.3g (less) FISIM P.119
Wages and Salaries D.11 Rent D.45
Employers’ Social Contributions D.12
Interest before FISIM allocation D.41g
(plus) FISIM P.119
Dividends D.421
Withdrawals of Income from quasi-corporations D.422
Income attributable to insurance policy holders D.441
Income payable on pension entitlements D.442
Collective Investment Fund shareholders – Dividends D.4431
Collective Investment Fund shareholders – Retained earnings D.4432
Rent D.45
Is carried over to the next account → Balance of gross Primary Income B.5g
Resources Uses Transaction Code Transaction CodeGross Operating Surplus B.2g Interest before FISIM allocation D.41g
Gross Mixed Income B.3g (less) FISIM P.119
Wages and Salaries D.11 Rent D.45
Employers’ Social Contributions D.12
Interest before FISIM allocation D.41g
(plus) FISIM P.119
Dividends D.421
Withdrawals of Income from quasi-corporations D.422
Income attributable to insurance policy holders D.441
Income payable on pension entitlements D.442
Collective Investment Fund shareholders – Dividends D.4431
Collective Investment Fund shareholders – Retained earnings D.4432
Rent D.45
Is carried over to the next account → Balance of gross Primary Income B.5g
Balance of Primary Incomes Account
“Cash” RHDI
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Resources UsesTransaction Code Transaction Code
Balance of Gross Primary Income B.5g Taxes on Income D.51
Social Benefits other than Transfers in kind D.62 Other current taxes D.59
Non-life insurance claims D.72 Employers’ actual social contributions D.611
Miscellaneous current transfers D.75 Employers’ imputed social contributions D.612
Households’ actual social contributions D.613
Households’ social contribution supplements D.614
Social insurance scheme service charge D.61SC
Social benefits other than transfers in kind D.62
Net non-life insurance premiums D.71
Miscellaneous current transfers D.75
Gross Disposable Income B.6g
“Cash” RHDI
Distribution of Secondary Incomes AccountResources Uses
Transaction Code Transaction Code
Balance of Gross Primary Income B.5g Taxes on Income D.51
Social Benefits other than Transfers in kind D.62 Other current taxes D.59
Non-life insurance claims D.72 Employers’ actual social contributions D.611
Miscellaneous current transfers D.75 Employers’ imputed social contributions D.612
Households’ actual social contributions D.613
Households’ social contribution supplements D.614
Social insurance scheme service charge D.61SC
Social benefits other than transfers in kind D.62
Net non-life insurance premiums D.71
Miscellaneous current transfers D.75
Gross Disposable Income B.6g
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Interest Payments
• Typically quite straightforward to decide if a transaction is observed by households or not
• The decision to include Gross Interest (D.41g) on the uses side is finely balanced
• Definitely something households observe
• Not typically captured by social surveys
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Interest Payments
• RHDI estimates presented on two bases:
Net Interest basis: Includes interest received and interest paid. “Netted off”
Gross Interest basis: Considers only interest received and disregards interest paid.
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Non-Profit Institutions Serving Households (NPISH)
• Comprised mainly of charities and universities
• Also includes entities like trade unions and political parties
• Combined with the household sector in the national accounts
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Measures of RHDI considered
United Kingdom Economic Accounts
Adjustments
Interest Basis
Net Interest Gross Interest
HH and NPISH Cash RHDI HH Only Cash RHDI
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Net Interest BasisMeasure 2007 2014United Kingdom Economic Accounts £17,306 £16,954HH and NPISH – Cash Basis £14,386 £13,907HH Only - Cash Basis £13,939 £13,610
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Gross Interest Basis
Measure 2007 2014United Kingdom Economic Accounts £17,306 £16,954HH and NPISH – Cash Basis £16,143 £14,780HH Only - Cash Basis £15,694 £14,506
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Potential Reasons for the Divergence
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Potential Reasons for the Divergence
Levels of per capita interest paid by (use) and received by (resource) the household and NPISH sector, seasonally adjusted
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Potential Reasons for the Divergence
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Contributions – Net Interest
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Contributions – Gross Interest
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Social Survey Comparisons
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