Statistical Classifications SystemsPart I

Md. Dilder HossainMd. Dilder Hossain

2

Contents

• Introduction

• Main characteristics of statistical classifications

• Principles of statistical classifications

• Use of classifications

• Methodological issues of statistical classifications

• International Family of Economic and Social Classifications

Contents

• International Standard Industrial Classification– Economic activities– Statistical units– Construction of ISIC

• Central Product Classification

• Classification of Expenditure According to Purpose

3

Introduction to Classifications

• Classifications - group and organize information meaningfully and systematically into standard format that is useful for determining similarity of ideas, events, objects, persons

• The preparation of a classification – the creation of set of categories (employment: unemployed and employed; sex: male and female). Categories need to be:

– comprehensive and well-structured – mutually exclusive and well-described– presented as a hierarchy that is reflected by the

numeric or alphabetical codes assigned to them

4

Introduction to Classifications (Contd.)

• Examples:– Type of economic activities– Type of products/goods/ services– Types of transactions, accounts in SNA– Type of goods, services traded– Types of Occupations– Gender– Health Problems, Diseases, Disability, etc.

5

Introduction to Classifications (Contd.)

• A Statistical classification: – a set of discrete categories– assigned to a specific variable in a statistical

survey/ administrative file– used in the production and presentation of

statistics • Standard classifications:

– agreed and standardized at national or international levels

• International standard classifications – developed by international organizations to standardize national and international communication

– used through all phases of the statistical process6

Introduction to Classifications (Contd.)

7

• Classification in System of National Account (SNA):•Classification of Institutional Sectors•Classification of Transactions; Balancing Items•Classification of Non-Financial and Financial Assets•International Standard Industrial Classification of all

Economic Activities (ISIC)•Central Product Classification (CPC)•Classification of Individual Consumption by Purpose (COICOP)•Classification of Function of Government (COFOG)•Classification of Product of Non Profit Institutions (COPNI)•Classification Of Selected Outlays Of Producers By Purpose (COPP)

Main characteristics of Statistical Classifications

• A strict and detailed hierarchical organization of the categories.

• Complete coverage of the population observed

• Mutually exclusive categories• Data should be

– Homogeneous within the group – Heterogeneous between groups

• Classification is ruled by consistent methodological principles

8

9

Principles of Statistical Classifications

• Objectives and statistical priorities to be served Objectives and statistical priorities to be served must be clearly stated must be clearly stated

• The organization (custodian) responsible for The organization (custodian) responsible for the preparation and maintenance of a the preparation and maintenance of a classification should be clearly identified and classification should be clearly identified and responsibilities statedresponsibilities stated

• A well-defined classification structure must be A well-defined classification structure must be preparedprepared

• Aggregated categories organized in a hierarchyAggregated categories organized in a hierarchy

Principles of Statistical Classifications (contd.)

• Instructions are needed on effective use of classifications for data collection and analysis

• Guidance and training material needed for a new or revised classification

• Descriptive definitions or complete listings of the contents of the defined categories are needed.

10

Use of statistical classifications

• To support the implementation of regulatory policies such as customs regulations or criminal legislation

• To standardize concepts of public services such as job placement, education, welfare or public health etc. to describe social, economic or natural phenomena

• Standard classification-in general use

11

12

Use of statistical classifications (Contd.)(Contd.)

• In collection of data In collection of data • In organization of collected dataIn organization of collected data• Aggregating and disaggregating of data sets Aggregating and disaggregating of data sets

meaningfully for purposes of analysismeaningfully for purposes of analysis• Presenting statistical informationPresenting statistical information• Construction of classification for a different Construction of classification for a different

variable, e.g. the variable, e.g. the socio-economic status socio-economic status classificationclassification

• As models for development/revision of related As models for development/revision of related classifications.classifications.

13

Use of Statistical Classifications for Use of Statistical Classifications for Policy DecisionsPolicy Decisions

• Legal importance and policy relevance are factors Legal importance and policy relevance are factors affecting the development and use of many affecting the development and use of many classifications. For example: Strong link between classifications. For example: Strong link between • Harmonized System (HS) Harmonized System (HS) and customs regulations and customs regulations

and agreementsand agreements• Classification of diseases and death in the Classification of diseases and death in the ICDICD

((International Statistical Classification of Diseases International Statistical Classification of Diseases and Related Health Problems)and Related Health Problems) and the formulation of and the formulation of prevention and treatment programmesprevention and treatment programmes

• Categories of ICD used for determining scope of Categories of ICD used for determining scope of insurance (Cause of death classified as suicide may insurance (Cause of death classified as suicide may be compensated differently by insurance programmes be compensated differently by insurance programmes than a death classified as accidental)than a death classified as accidental)

Use of Statistical Classifications for Policy Decisions (contd.)

• The categories specified for a classification must be regularly evaluated for possible legal and policy implications

• Classifications – applied to people must consider issues of human rights (International Classification of Impairments, Disabilities and Handcaps –ICIDH)

• Regular hearings or meetings should be conducted

14

Methodological issues of Statistical Classifications

• Users’ requirements issues – Who the users are?– How they will be using the classification?

• Harmonization • Conceptual issues• Collection of necessary information• Classification structure• Maintaining, updating, revising of classifications

15

Harmonisation

• Harmonization:– reconciliation of different classifications and statistical

standards into a common framework, – maximizing the correspondence between them

• Harmonization involves – the establishment of mutually consistent categories for the same or for closely related variables

• The objective of harmonization of statistics – to make it possible to combine or compare data for– different populations– different periods – different data collection methods – different statistical units

16

Conceptual issues

• Scope of classification

• Main variable and primary units for which the main variable can be observed

• Rules for linking different statistical units to classifications

• Rules for identifying same value of the variable

• Similarity criteria used to define higher level categories in hierarchical classifications

17

Collection of necessary information

• How to collect the information which describes the defined categories and the dividing lines between them?

• Construction of classification rely on subject matter experts and other secondary sources of information

18

Classification structure

• Classification structure refers to the arrangement of the content of a classification

• Rule for identifying the statistical units for:– same category of a classification– different categories of a classification

• Similarity criteria used to define higher level categories

19

Classification structure (contd.)

• Explanatory notes (descriptions, listing of what to include and exclude)

• Correspondence tables – Explain where, and to what extent,

concepts and categories in one classification, may be found in other classifications

20

Maintaining and up-dating the classification

• Maintenance: correction of errors

• Maintenance and updating is ongoing activity of the custodian of a classification

• Up-dating:– modifying the descriptive definitions– introducing new, detailed categories

21

22

International Statistical Classifications (ISC)

• Developed and adopted by international Developed and adopted by international institutions; institutions; require approval of UN require approval of UN Statistical Commission (UNSC) or other Statistical Commission (UNSC) or other competent intergovernmental board: competent intergovernmental board: WCO, WHO, IMF, ILO depending subject WCO, WHO, IMF, ILO depending subject matter matter

• Products of international agreements Products of international agreements among national authorities responsible for among national authorities responsible for statistics in the respective areasstatistics in the respective areas

• Standardize national and international Standardize national and international communicationcommunication

• Ensure correct implementation of Ensure correct implementation of agreementsagreements

23

ISCs- (Contd.)ISCs- (Contd.)

• Custodians of ISCs are usually Custodians of ISCs are usually international agenciesinternational agencies

• Custodians of National Statistical Custodians of National Statistical Classifications are the National Statistical Classifications are the National Statistical Agencies (NSAs)Agencies (NSAs)

• Custodians are required to maintain and Custodians are required to maintain and update update

• Custodians develop a network of technical Custodians develop a network of technical advisers who are both producers and advisers who are both producers and users of statistics for updatingusers of statistics for updating

Types of classifications

• Within each subject matter area :– Reference classifications– Derived classifications– Related classifications

24

Reference Classifications

• Those that achieved broad acceptance • Product of international agreements through

approval by the UNSC or another competent intergovernmental board such as WCO, WHO, IMF, UNESCO or the ILO depending on subject area

• Approved and recommended as models for the development or revision of corresponding classifications with respect to:– The structure– The character and definition of the categories

25

Reference Classifications (contd.)

• Means of harmonization of international statistics

• Guidelines for the preparation of national classifications

26

Reference Classifications: Examples

• Harmonized Commodity Description and Coding System (HS)

• International Standard Industrial Classification of All Economic Activities (ISIC), Rev.4

• Central Product Classification (CPC),Ver.1.0• International Standard Classification of Education

(ISCED 1997), UNESCO• International Standard Classification of Occupations

(ISCO-88), ILO,1990

27

Requirements forReference Classifications

• Usable for data collection and presentation at international level

• Guidelines for national and multinational classifications • Have to be general enough to

– be applicable to all countries– provide room for national adaptation and specifications

• Have to be specific enough to– allow for useful data collection– provide reasonable guidelines for creation of national

classifications• Orchestrated updates within the international statistical

classifications. (review ISIC & CPC in 10/5 year intervals)

28

Derived classifications

• Based upon reference classifications.• Groups obtained by re-arrangement / sub-

divisions of items from reference classification• Adopt structure- consistency of aggregates• Respect building blocks- additional detail where

necessary• Tailored for use at national or multinational level Ex: -General Industrial Classification of Economic

Activities within European Communities (NACE), based upon ISIC - ISCO-88 (COM) developed for Eurostat on the basis of ISCO-88

29

Related classifications

• Classifications that partially refer to reference classifications, or

• Associated with the reference classification at specific levels of the structure, only.

• Linked mainly through correspondence tables– many links will refer to partial

correspondencesEx: - North American Industry Classification System

(NAICS) related to ISIC, by being compatible with it at

2-digit level, - Australia New Zealand Standard Industrial

Classification (ANZSIC) related to ISIC

30

Example: Activity classifications

• Reference classification– ISIC Rev.3.1

• Derived classification– NACE Rev.1.1

• Related classifications– NAICS, ANZSIC

31

ISIC Rev. 3.1

NAICS

NACE Rev. 1.1

ANZSIC

National VersionsNational Versions

32

NACE

ISIC

NACE(France)

NACE(Germany)

NACE(Spain)

Activities

National versions of NACE

Products

CPC

CPA

National ProductClassifications

Correspondence / Links across Classifications

• The extent of correspondence and harmonization possible between different classifications depends on:– The degree to which the various categories

are the same– The conceptual links which can be

established between them. • For instance: COFOG, COPNI, COICOP and

COPP:– are all concerned with the same type of

variables, namely expenditures according to purpose

33

Correspondence / Links across Classifications (contd.)

– But their scopes are different - purpose of the expenditures made by a particular type of institutional unit, as defined in SNA, namely: government; non-profit institutions serving households; households and producers respectively

– For all these classifications education and training as one type of purpose, however, goods and services actually brought are different.

• For instance: for HHs – for purchasing of educational services for individual HH members; for Government – expenditures for educational services at the institutional level.

34

Correspondence / Links across Classifications (contd.)

• Scopes of these classifications are intended to cover all possible types of units having economic transactions

• Therefore, the purpose of all transactions considered as “economic” according to the total scope of the SNA.

35

Correspondence / Links across Classifications (contd.)

• Correspondence between COFOG (government expenditures on education) and ISCED (educational programmes), requires:

–set of expenditures classified by COFOG nested within ISCED scope of educational programmes

–links between the units of COFOG (economic transactions) and ISCED (programmes) defined /

identified–categories on education and training expenditures

in COFOG compatible with ISCED for educational activities

36

37

International Work on Classifications

UN Statistical Commission

UNSD ILO UNESCO WHO Membercountries

Expert Group on International Economic and Social Classifications

38

Technical Subgroup on Technical Subgroup on ClassificationsClassifications

• Established in November 1999 by EGEstablished in November 1999 by EG

• Meets twice a yearMeets twice a year

• Reports to EG on progressReports to EG on progress

• EG acts as steering committeeEG acts as steering committee