Resultados de las encuestas aplicadas a turistas

Given the limitations of admin data to create a unified representation of the economy through technical means, this section examines statistical efforts to reconcile these data sources through methodological and conceptual reconciliation. It demonstrates how, because of this work, leading global statisticians are confronting fundamental differences between the economic interactions relevant to households and the picture of the economy given by national accounts frameworks. Moreover, it is increasingly recognised that aligning these is not a technical statistical problem – rather, it relates to the fact that ‘the economy’ being described in each case it not the same thing: on the one hand, it refers to the ‘formalist’ understanding of the economy as contained within a complete system of market transactions, and on the other a ‘substantive’ understanding of household livelihood. Thus, I suggest the statistical work increasingly exposes the fallacy of assuming macroeconomics can be empirically ‘micro-founded’ at the household level, because the economic interactions of households are not reducible to the macroeconomic vision of a closed system of price-forming markets described by national accounts.

The Incommensurability of National Accounts and Household Livelihood

Efforts to develop harmonised methodological frameworks in which the measurement of micro-level inequality can be reconciled with national accounts standards have been undertaken by international working groups, co-ordinated through the OECD and ECB. These working groups gather statisticians skilled in both areas from national statistical agencies, in attempt to develop methodologies to achieve this reconciliation (OECD EGDNA 2016; OECD WPNA 2016; ECB 2016). The discussions centre around apparently dry, technical matters: the similarities and differences between sub- items as they may be defined in the national accounts and relevant micro-data variables from household surveys; how best to match up survey items to national accounting entities; the reasons for the ‘under-reporting’ of particular items in micro data (alcohol, for instance) or their complete absence. Through confronting these issues through detailed, item-level definitional and conceptual comparisons, it is hoped to arrive at a reconciled set of data on inequality which is consistent with national accounts totals and

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can be presented side-by side. Two main approaches to the issue are emerging (Interview JH; Interview PL), both of which have ultimately come to accept that the economic concepts relevant to measuring household living standards are not ultimately compatible with, and do not fully overlap, those drawn upon in the national accounts; however, they manage this fact in different ways.

The first, favoured by the OECD in its approach to income and consumption inequalities (OECD 2017), has been to treat the national account definitions and totals as correct and ‘complete’, and from this try to match the survey data onto these results. This is achieved by scaling up the micro-data totals to the national accounts aggregates, and by making assumptions about how the distribution of the ‘gaps’ influences the overall level of inequality in the household sector of the national accounts. The key questions to be resolved here are which of the national accounts items the survey items correspond to, and (where micro data is missing) how the imputed income for these gaps should be allocated across households. Through these discussions, and various experimental statistical exercises, standardised principles are beginning to be developed for allocating the gaps so that inequality and macroeconomic figures can be presented in a unified way. The outcome of these discussions how these issues are handled has a significant impact on the picture of inequality that is produced, and that will be used in economic analyses and political discourse.

We might understand this technical work as a process of methodological alignment towards a more complete account of economic activity and its distribution. And this is indeed how national accountants sometimes narrate it. A staff member at the OECD national accounts division indicated that:

We have the national account total and this is the starting point, and then you say, “okay,

what are the gaps, what is the quality of this, what is the quality of that?”…You make

adjustments, and with every step you come closer to the national accounts…you start

distributing in line with national accounts totals (Interview JZ).

But again, the story is more complicated than this suggests. Statisticians are more reflexive than anybody about the links between data and the practicalities of its collection, and about the inherent differences which result from constructing measurement of phenomena via one instrument or another. One ONS staff member

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explains that the differences between micro and macro sources reflect not just measurement error but: ‘the fact that with the micro statistics, obviously the main object of interest is the household, whereas in the national accounts they are looking at things from a whole economy basis’ (Interview RT); an OECD publication similarly notes that: ‘both frameworks are influenced by the practicalities of collecting data relevant to the concepts to be measured’ (OECD 2013, 15). This is another way of saying that these are not gaps between measurements and a unified economic reality, but rather reflect the measurement of different economic phenomena, implied by different perspectives on what ‘the economy’ constitutes: in Polanyian terms, between economy in its substantive and formal sense.

This inescapable fact has resulted in considerable practical difficulties in aligning these concepts: many of the items missing from the national accounts have turned out not to be ‘gaps’ per se, but rather economic phenomena that either do not make sense to measure from the perspective of household living standards or prove almost impossible to measure in household surveys, as they are so far removed from the everyday realities of people’s economic experience. Most of these items stem from finance. A prominent example of this is ‘Financial Intermediary Services Indirectly Measured’ (FISIM). FISIM is an important income concept within the national accounts, used to represent the ‘value’ created by the financial services sector. But it is not registered as an expenditure item in micro surveys. Households could not be expected to report upon the extent to which they personally benefit from a fictional abstraction created to represent the national income generated by the entire financial sector. As a Eurostat statistician explains: ‘if you turn up to someone’s door and ask them how much FISIM they receive, they have no idea what you are talking about’ (Interview PL). This point is echoed in an ONS study:

Some national accounts variables have no equivalent in income microdata, either due to their conceptual nature or practical considerations. For example, FISIM and investment income attributed to insurance policy holders both have no counterpart in micro-data (ONS 2015a, 4).

During a discussion of the OECD’s expert group, one of the OECD national accounts team, while agreeing that ‘from an income perspective FISIM is probably one of the less ingenious ideas in the national accounts’, nevertheless emphasised the:

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Importance of FISIM is to the total framework of the national accounts. I mean, you need some imputation for this item. One could argue that here, where we focus on the disposable income of households, it is less important, so we should reason without FISIM. That was done for France. But I understand that in previous meetings we agreed

to try to estimate FISIM…it’s important to be aligned with the national accounts, so we

have to find a way to include FISIM, whether it’s a good idea or a bad idea. (EG DNA 2016, emphasis added).

This raises interesting questions about whether this is indeed an ‘under-reporting’ of income at the household level (as sometimes implied), or not: FISIM itself is a recent and highly artificial accounting construct with a tortured, contested post-war history within the SNA itself (Christophers 2011, 2013). Recent scholarship has argued that it has been invented simply to ensure that the non-productive nature of finance was not revealed by the national accounts, and serves to legitimise finance-driven growth models (Assa 2016). The matter of incorporating FISIM into household income for the purposes of inequality measurements thus remains unresolved.

A similar issue arises with income from share dividends, which in technical national accounts terminology are referred to as ‘distributed income of corporations’. Again, measuring such an income concept in surveys has proven impossible, and statisticians explicitly link this to the remoteness of this form of financial remuneration to the daily economic experience of most households. The head of the Austrian statistical agency told the OECD’s expert group that for share dividends there is:

Massive under-reporting in the surveys… [and] there is no tax data, because these things

are not taxed…so we have no solution at the moment. Those people that are asked in the

survey simply don’t give an answer –they don’t know it, it’s not important to them, they

don’t give the right answer (EG DNA 2016).

This partly relates to a point discussed above – that the temporality of financial markets simply makes it impossible for most people to truly comprehend their own economic position at a given moment in time, if asked in a survey. But it also points to a bigger issue: that in advanced and highly financialised economies many of the income concepts that have become important to national income and macroeconomic analysis, that simply do not feature in the everyday lives of people, and are thus immeasurable when

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considering inequality at the household level. This in turn frustrates statistical attempts to give a harmonised description of ‘the economy’: the ‘practical’ limitations of surveying actually have to do with the fundamental disjuncture between households’ everyday experience of the economy and the way in which modern economies function at the macro level: the growing disconnect between the measurement of livelihood and habitation and of improvement. The fact that there are moves to impute and scale up these concepts, on the basis they are ‘missing from the micro data’, therefore has significant political implications for how inequality comes to be defined and which actions might best reduce it: if FISIM and share dividends are included in this way, then policies of financial inclusion might begin to seem an effective route to inclusive growth; in not, the efficacy of these actions might seem less evident.

Emergence of Hybrid Definitions of National Accounting Concepts

The second approach to this issue more explicitly rejects the assumption that national accounts concepts are the definitive standard, and that micro data should be scaled up to match these. Instead, new hybrid definitions of these concepts are being developed. This has been favoured by the ECB in its work on aligning wealth inequality data aligned to national accounts balance sheets (Interview JH; ECB 2016). Here, the focus has been painstakingly working through the different classes of assets and liabilities found in national accounts balance sheets, to assess the extent to which they can meaningfully be compared with items from household wealth surveys such as the HFCS. This might be either because they are completely excluded from surveys, or are defined so differently in conceptual terms at the household level that comparison is considered meaningless. A paper laying out this approach:

Concludes that it is not reasonable to stick to one wealth concept…it is almost impossible to

apply a standardised concept as the wealth as well as income concept applied in both statistics are considerably different…some concepts do not necessarily make sense at the balanced macro

system level…the micro survey focuses only on one individual households, which forces

one to define the concepts from the household point of view…there are severe coherence

problems with some of the components (Kavonius and Honkkila 2013, 3; 6; 14; 19

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This involved working through different categories of wealth and assessing their definitions and the comparability between the two sources. Thus, such moves represent the insistence by the statisticians and accountants working on these programmes that the quest to reconcile the household view of living standards with the macroeconomic vision of the national accounts is a futile endeavour, as they are representing fundamentally different views of the economic process.

Again, interestingly, this acceptance is partly driven by the difference between financial assets and real assets. As a member of the ECB expert group explained, the coverage of real assets is patchy in national accounting systems and that ‘definitely the coverage of non-financial assets is better in the survey than the coverage of financial assets’ (Interview JH). A working paper substantiates this point further:

Non-financial assets, i.e. predominantly housing wealth, are relatively easy to estimate at

the micro level … [However] the financial flows at the macro level are more reliable than

in the surveys. Consequently, in wealth surveys the share of non-financial wealth has been recorded as significantly higher compared to the national accounts (Kavonius and Honkkila 2013, 14).

For this reason, the ‘hybrid’ wealth concept adopted to use to build harmonised DiNA in these exercises excludes real assets ‘as non-financial assets are not available at country level’ (Kavonius and Honkkila 2013, 6). This is a rather extraordinary conclusion. It essentially concedes that many of the assets most central to households’ livelihoods, such as property or land, are to be excluded from the measurement of wealth inequality because the national accounts data on these assets is incomplete.

The issues also extend to the complex entanglements between the public and private, ‘business’ and ‘household’ aspects of wealth. This particularly affects small businesses run from a family or by a few self-employed individuals. The national accounts draw a distinction between ‘unincorporated enterprises’, which are situated within the private household sector, and ‘quasi-corporations’, which count as ‘separate institutional units’ that ‘function as if they were corporations’ (UN 2008, 440). The ECB methodology outlines some of the problems that emerge from the entanglement between the private and the public that this involves:

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Financial and non-financial assets, as well as liabilities, are spread over the various items

of the household balance sheet…and it is thus not possible to distinguish between the

wealth of the unincorporated enterprise and the wealth of the household…If, however,

the economic activity is considered to be a separate unit, any property rights are classified in national accounts as equity participation held by the household... In general, the distinction between households and business wealth was considered problematic for respondents, particularly in the case of small businesses (ECB 2016, 54).

Of course, such a problem only makes sense or can be comprehended given the framework of the national accounts, which are required to sort these things out into neat sectors called ‘household’ and ‘business’; and this in turn can be traced back to the separation of the corporation as a legal person in Western legal systems. A member of the ECB team illustrates this point further:

We have something called business wealth … the problem with business wealth in the

survey is that it’s not very comparable across countries, because it’s something that’s not

very easy to collect. the household does not think in terms of national accounts definitions when they report their business wealth. So part of it may be classified, for example, as household deposits in the national accounts, but the households consider that they are self-entrepreneurs and consider it as business assets (Interview JH).

As we see, the economic activities of households tend to overflow macroeconomic accounting categories; it is these messier realities that the wealth surveys must deal with. As a result of these and other issues, the ECB has constructed a hybrid wealth concept which it uses to construct its reconciled distributional wealth national accounts which excludes all these areas of incompatibility. This is restricted to widespread, commonly held and stable assets such as bank deposits, publicly listed equity, bonds and mutual funds. Even pensions were excluded, because of valuation problems. It was only on this basis that the ECB could get the micro data ‘coverage ratios’ to the national accounts to acceptable levels (27-62% of national accounts data), and ‘wealth’ could be made to look like an almost stable object once more.

To summarise, both methods discussed above represent a means for statisticians to confront and manage the fundamental incompatibilities between the formalist vision of the economy given in national accounts frameworks with the realities of the economy as experienced by households. Accepting that no single measure can capture both the aggregate economy and household-level inequalities, they bring into question the

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national accounts view of the economy as a closed and unitary system, and the economic dimensions of inequality as neatly contained within this system.

Summary

This chapter has surveyed recent statistical attempts to address one of the major critiques levelled at GDP – that it fails to account for the negative effects of rising inequality and social exclusion that may prevail even during periods of aggregate economic expansion. In line with the rest of the thesis, its central interest has been not in assessing how far this agenda is undermining the value placed on growth relative to other political or social objectives, but rather how it is interacting with and disrupting modes of economic reasoning which make the economy appear to be an autonomous and unified sphere which can grow and shrink in the first place. As argued in chapter 3, in Polanyian terms this represents the test of whether the beyond GDP agenda holds the potential to challenge the formalist understanding of the economy as fully contained within a closed system of price-forming markets.

The first section outlined how this agenda has been framed in terms of the need to close the gaps between measures of inequality and the national accounts, and the influence of economic theory on this. The recent focus on harmonised data on inequality and macroeconomic aggregates is bound up with a rethinking of the ‘micro-foundations’ on which new classical macroeconomic models are based. Whereas until the crisis adequate micro-foundations were assumed to consist of theoretical reconciliation with rational representative agent assumptions of microeconomics, there are now serious moves to reconcile macroeconomic theory with household-level heterogeneity, grounded in empirical data. Part of this project is an attempt to show how micro and macro pictures of the economy can be reconciled so that inequality can be seamlessly integrated into macroeconomic models. This agenda is predicated on the formalist assumption that the empirical living standards of households and national accounts aggregates represent