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Government Output in the National Accounts

Published online by Cambridge University Press:  26 March 2020

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Abstract

UK national accounts statistics of government ‘output’ are based on inputs, especially employment; earlier UK conventions attempted to measure government output using statistics of activity (of the sort currently advocated in some quarters) but were dropped for reasons outlined below. The note provides some examples of revised activity-based ‘output’ measures and compares them with the old approach and with existing conventions. It concludes in favour of retaining existing conventions until more statistical research has been undertaken.

A fuller account of the issues, methodology and data summarised in this note is given in ‘Measuring output and productivity in government’ by M. S. Levitt and M. A. S. Joyce, NIESR Discussion Paper, no. 108.

Type
Articles
Information
National Institute Economic Review , Volume 115 , February 1986 , pp. 48 - 51
Copyright
Copyright © 1986 National Institute of Economic and Social Research

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References

(1) P. Hill, The Measurement of Real Product, OECD, 1971.

(2) W. Baumol, ‘The economics of unbalanced growth’, American Economic Review, 1967.

(3) The social indicator studies of the 1960s and 1970s represented an attempt to supplement conventional national accounts with indicators bearing more directly on social welfare.

(4) ‘National income statistics, sources and methods’, HMSO, 1956.(5) UN, ‘Manual on national accounts of GDP at constant prices’. Statistical Paper Series M, no. 64 by Peter Hill. See also R. Marris, ‘Problem services’, Special Conference, International Association for Research into Income and Wealth (IARIW), Luxembourg, Sep tember 1983, mimeo.

(1) These issues are discussed more fully in ‘Productivity in central government’ by M. S. Levitt, Public Finance Foundation Discussion Paper no. 4, 1985, available from Public Finance Foundation, 3 Robert Street, London WC2.

(2) Whereas banks and insurance companies use hundreds of volume activity indicators for internal productivity measurement, the national accounts measure insurance output solely in terms of the deflated value of premium income; for banks a low weight is assigned to the number of transactions; the main ‘output’ indica tors refer to the deflated value of financial transactions and to the number of employees. See Levitt, op. cit. and J. Revell, Costs and Margins in Banking, OECD, 1980.

(1) The DHSS produces a ‘cost-weighted index’ of hospital and community health service activity which measures the overall change in several indicators of activity (e.g. in-patient cases, health visits, etc.) weighted by their unit costs in the preceding year. Unfortunately this is not supplemented with any discussion of how sensitive the results are to the choice of activity measures, nor is any evidence provided on changes in the quality of service. See ‘Sixth Report from the Social Services Committee, Session 1984- 85, Public Expenditure on the Social Services’, HC339.

(2) Levitt and Joyce, op. cit.