Measurement of Government Output and Productivity for the National Accounts: Interim Report

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Measurement of Government Output and Productivity
for the National AccountsInterim Report

• Tony Atkinson

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Subject of Review

• National accounts

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A Long-Running Story

• Conventional approach Output Inputs
• Assumes zero productivity growth
• SNA 1993 approach DIRECT measurement of output

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Handbook on price and volume measures in
national accounts

• Inputs e.g. number of doctors
• Activities e.g. number of operation
• Outputs e.g. amount of care received by a
  patient
• Outcomes e.g. improved health

Individual services supplied to individuals (such
as health or education)Collective services
provided to society as a whole (such as defence)
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The A/B/C Criteria for methods
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ONS Programme of Introducing Direct Output
Measures 1998-
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Key Findings of Interim Report

• ONS among the first to introduce direct measures,
  but first generation methods need to be refined
  (as already in health).
• Interim Report sets out a principled approach
  within the framework set by international
  guidelines.
• Important to improve measures of government
  inputs as well as outputs.
• Need for increased statistical resources to be
  allocated to measuring government outputs and
  inputs.

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Principles
Output

• Output should be measured by incremental
  contribution to individual or collective welfare
  i.e. the added value by service concerned.
• Start from services provided, and seek
  indicators that give full coverage.
• Value should be seen as adjusted for quality.
• Formal criteria should be established for
  extending direct output measures to further
  services.
• Measures should cover the whole of the UK.

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Added Value
Input Activities Output Outcome

• Parallel with market output
• Measures incremental contribution to individual
  or collective welfare
• Value depends on quality and context

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Extending Coverage

• Criteria for introducing a new direct output
  measure
• Cover the full range of services
• Makes allowance for quality change.
• Effects have been tested service by service.
• Context has been fully assessed, including
  implied productivity estimate.

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Principles
Inputs and Productivity

• Measures of inputs should be as comprehensive as
  possible, and should include capital services
• Consideration should be given to the split
  between current and capital spending.
• Criteria should be established for price
  deflators applied to input spending series.
• Independent corroborative evidence should be
  sought on government productivity, as part of a
  process of triangulation.

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Examination of Input Data

• Issues
• Matching classifications.
• Timeliness.
• Reliance on a small number of pay and price
  deflators
• Capital consumption data.

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Triangulation

• Outputs
• divided by
  Productivity
• Inputs
• .we need to work on all three.

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Necessary WorkProgrammes

• Review has already established work programmes
  with Departments covering key areas.
• Report sets out questions that need to be
  addressed in each field.

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Necessary Work Programmes

• Health improved measures introduced in June
  2004 further work on quality adjustment, UK
  coverage, GP usage productivity article to be
  published.
• Education improved volume and attainment
  measures, exploration of quality adjustments, and
  value of education approach, possible satellite
  account.
• Public Order and Safety work on division
  between collective and individual services,
  alternative output measures, UK coverage.
• Social Protection work on improved coverage, UK
  coverage, relation with market sector.

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Final Report To be prepared by January 2005 Will
draw on responses to Interim Report and
discussions with international organisations and
national statistical agencies.