Household Production and Consumption in Finland 2001

7 Integrating household production
into the national accounts
The basic idea of the Household Satellite Account is to calculate a monetary
value for household production and to make it visible in economic terms.
Further, the idea is to produce a module, a separate account that, if and where
necessary, can be integrated with the national accounts. The integration of
these different accounts will produce an extended account that describes the
whole economy. Time series on this extended economy offer a different
picture of economic development compared to the core accounts. According
to research by Professor Duncan Ironmonger, household production and
market production serve as buffers for each other so that during strong
business cycles and increasing market production, household production will
tend to recede; and during weak business cycles, the opposite is true.
According to Ironmonger the ratio is not quite 1:1, but the factor value is
around 0.8 (Ironmonger & Soupournas 2003). As yet no economic time series
are available in Finland that cut across different business cycles.
In the long term economies are affected not only by cyclical fluctuations,
but also structural changes. Production shifts from one sector to another.
These shifts may vary in direction and intensity at different stages of market
economy development. It is widely agreed that the main trend is for
production to shift from the household sector to the market economy, but it is
possible that estimates have been exaggerated. There is also movement in the
opposite direction, from the public and private sector to households, which
may not have been fully recognized. At least it may be said that strong business
development requires increased production in the household sector, too. One
example is provided by the increased amount of time spent by households in
the acquisition of goods and services (Varjonen & Aalto 2005).
In the discussion that follows, household production is integrated with the
household sector accounts of the national accounts and with parts of the whole
system of accounts. All the figures are for 2001. 9
7.1 Integration with household sector accounts
We begin by integrating household production with the household sector
accounts in the system of national accounts. The sequence of household
accounts is presented in detail in Tables 1 and 2 of Appendix 9. One factor
that somewhat complicates the integration is that part of household
production (13%) is already included in the national accounts. To avoid
duplicate counting, a column has been added to the integrated tables under
the heading: Adjustments (SNA – non-SNA). In the production account,
generation of income account and capital account deductions are entered in
9 The FISIM (Financial Intermediation Services Indirectly Measured) methodological revisions
made to the national accounts in summer 2005 have not been taken into account. Therefore
the figures describe the situation in spring 2005.
62 Statistics Finland National Consumer Research Centre