Measuring Non-market Output in the National Accounts by: Robin Lynch Discussant notes Peter van de...
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Transcript of Measuring Non-market Output in the National Accounts by: Robin Lynch Discussant notes Peter van de...
Measuring Non-market Output in the National Accounts
by:Robin Lynch
Discussant notes Peter van de Ven
Fokke & Sukke want railway company back in government“One can say a lot about civil servants, ….
but they always leave on time”
General introduction
Non-market services– SNA 1993: Services produced by government and NPISHs that are supplied free or at economically insignificant prices– ESA 1995: Sales < 50% of costs of production
No economically significant prices available
By convention: value of output = sum of costs:– Intermediate consumption– Wages and salaries– Depreciation– (User cost of capital)
General introduction, continued
Volume measurement of non-market services:
Input methods:– (Detailed) deflation of inputs– Deflation of wages and salaries using e.g. collective
wage agreements
By definition: (multifactor) productivity = 0
Criticism: input methods do not properly reflect the change in the volume of services provided => output indicators
– SNA 1993: para. 16.133 and 16.134– Handbook on Price and Volume Measures in NA– Atkinson Review
Measurement of healthcare in UK
80
90
100
110
120
130
140
1995 1996 1997 1998 1999 2000 2001 2002
Inputs Output Productivity
General introduction, continued
Issues and problems related to output methods:
– Individual versus collective services– Unit of measurement
– Activity (e.g. days in hospital, operations)– Output (e.g. treatments) = outcome attributable to the
relevant productive activity– Outcome (e.g. life expectancy)
– Measurement of quality– Direct survey– Quality of inputs– Outcome indicators
– Additional benefits from public services as a consequence of additional (future) income and/or assets
Robin Lynch:
Main criticism of Robin Lynch
Output methods assume an equivalence between non-marketed output and marketed output => non-marketed output is fundamentally different:– Inconsistent with fundamentals of the 1993 SNA
No price is charged => no value can be observed No market mechanism for the determination of the
nature of the services => consumer marginal utilities are not properly reflected
– Often, one has to rely on activity indicators => such indicators are not representative– Quality changes impossible to capture
Economically more meaningful concept: capacity to deliver = deflated inputs
Robin’s Island
Year Qualification No of pupils
Salary teacher
Exam passes
2000 Standard 3 50,000 1
2001 Standard 3 50,000 3
2002 Standard 0 50,000 0
2003 Higher 0 55,000 0
2004 Higher 1 55,000 0
2005 Higher 2 55,000 0
Questions and remarks
– Collective versus individual services important: Collective services: “capacity to deliver” Individual services: price and value of the output
may not be observable, but what about the volume of the output?
– Inconsistency with SNA? In value terms, government is recognised as
producer of services– No market mechanism?
Consumer preferences via democratic elections? Many non-market services have inflexible demand By and large, consumer preferences are reflected
– Activity indicators, quality change? Fundamentally different for market services?
– How to deal with additional benefits?