HOUSEHOLD AND ENTERPRISE SAVING AND CAPITAL FORMATION IN THE UNITED STATES: A MARKET TRANSACTIONS VIEW

Contrary to conventional macro theory, it is not the consumption function in terms of either the permanent income or the life-cycle theory of saving that has furnished the saving for enterprise capital formation in the United States. Household sector accounts indicate that household gross saving, correctly measured, did not exceed household gross capital formation in the United States over the period since 1947. Furthermore, historical data on enterprise saving and capital formation in the United States, and cross-section tax return data of U.S. corporations indicate that the gross saving for many enterprise sectors has been equal to or greater than their gross capital formation. There are exceptions, however: these same sources indicate that public utilities have borrowed substantially to finance their capital formation. Finally, it is argued that employer pension and insurance reserves held by financial institutions for future benefit payments represent retained income of a nature similar to undistributed profits, and that these constitute a source of saving in the economy.     

THE DISTRIBUTION OF PUBLIC EXPENDITURE AMONG HOUSEHOLDS IN THE UNITED STATES*

This paper presents an analysis of the distributive impact of government expenditures in the United States. The analysis uses a household-level microdata file drawn from the 1970 U.S. Census of Population, with additional income and tax variables drawn from the Internal Revenue Service 1969—70 Tax File. The results are presented at both federal and local levels and include analyses of the distribution of individual benefits, as well as of overall taxes and net benefits. Since a microdata file was used, distributional effects are examined with respect not only to the “traditional” variables of income class and household size, but also with regard to the number of earners in the household and the sex and race of the household head. In a further paper in a subsequent issue of this review we will present the results of a similar analysis for the United Kingdom, and compare the results for the two countries.     

THE TREATMENT OF PENSIONS AND INSURANCE IN NATIONAL ACCOUNTS*

In the course of the nearly two decades since the revised SNA was developed, the role of pensions and insurance in the developed western economies has been significantly altered. The United Nations System of National Accounts (SNA) is not fully consistent in its treatment of pension and insurance transactions. This paper examines whether, in view of the changed institutional context, a modification of the SNA treatment of this complex of flows would be desirable. It investigates the impact on household income and saving of adopting a somewhat more consistent transactor/transaction approach for all pension and insurance transactions. Four main topics are covered: (1) social security, (2) private pensions, (3) life insurance, and (4) casualty insurance. Each is considered in terms of the treatment of contributions, the treatment of benefits, and the handling of reserves and the income generated by them. The same sorts of problem arise in all four cases.     

THE INTEGRATION OF MACRO AND MICRO DATA FOR THE HOUSEHOLD SECTOR1

National accounts in their present form do not serve very well as a framework for microdata, largely because of differing concepts and coverage in the macro and micro data. This article identifies the differences in sectoring and the handling of imputations and attributions between macro and micro data, and then proposes a form of presentation of the macro accounts that will facilitate their integration. Data for the United States in 1980 are used as an illustrative example. The final section explores the consequences of the proposed alterations in the macro accounts for the analysis of saving and investment and the accumulation and distribution of wealth, using U.S. data for the period since 1947. The article concludes that the proposed alterations do lead to new analytical insights, and further, that in their present form the national accounts are both misleading and inadequate.     

THE ROLE OF MICRODATA IN THE NATIONAL ECONOMIC AND SOCIAL ACCOUNTS*

Microdata sets—samples of data relating to individual reporting units—can provide a valuable extension of the national economic accounts as they presently exist, making it possible to meet many of the criticisms being leveled at the accounts over their failure to include much nontransactions information that is essential to the evaluation of economic and social performance. To serve this purpose, however, the microdata sets must be integrated with the aggregate accounts, and with one another. A microdata sets relating to any given sector should add up (with appropriate weighting) to the economic constructs for that sector in the national accounts, and the microdata set for one sector should be articulated as appropriate with those of other sectors. This paper discusses techniques for constructing such microdata sets, including necessary adjustments of the macro accounts, techniques of alignment of microdata with the macro accounts and the creation and development of synthetic microdata sets. Synthetic matching and other techniques of merging data sets are discussed. The paper concludes with a consideration of the methodological implication of the integration of microdata and national accounts.     

Disruptive innovation for social change

Countries, organizations, and individuals around the globe spend aggressively to solve social problems, but these efforts often fail to deliver. Misdirected investment is the primary reason for that failure. Most of the money earmarked for social initiatives goes to organizations that are structured to support specific groups of recipients, often with sophisticated solutions. Such organizations rarely reach the broader populations that could be served by simpler alternatives. There is, however, an effective way to get to those underserved populations. The authors call it "catalytic innovation." Based on Clayton Christensen's disruptive-innovation model, catalytic innovations challenge organizational incumbents by offering simpler, good-enough solutions aimed at underserved groups. Unlike disruptive innovations, though, catalytic innovations are focused on creating social change. Catalytic innovators are defined by five distinct qualities. First, they create social change through scaling and replication. Second, they meet a need that is either overserved (that is, the existing solution is more complex than necessary for many people) or not served at all. Third, the products and services they offer are simpler and cheaper than alternatives, but recipients view them as good enough. Fourth, they bring in resources in ways that initially seem unattractive to incumbents. And fifth, they are often ignored, put down, or even encouraged by existing organizations, which don't see the catalytic innovators' solutions as viable. As the authors show through examples in health care, education, and economic development, both nonprofit and for-profit groups are finding ways to create catalytic innovation that drives social change.     

THE DISTRIBUTION OF PUBLIC EXPENDITURES AND TAXES AMONG HOUSEHOLDS IN THE UNITED KINGDOM*

This paper presents an analysis of the distributive impact of public expenditures and taxes in the United Kingdom. The analysis uses household level microdata from the 1971 Family Expenditure Survey, with tax and expenditure aggregates drawn from the national accounts. The analysis is the first to allocate all taxes and public expenditures for the United Kingdom, and the results are compared to those from the more restricted analyses carried out by the U.K. Central Statistical Office. Results are presented for individual taxes and benefits as well as for overall net benefits and they describe distributional effects with respect to income class, household size, number of earners and housing tenure. A final section of the paper compares the results to those from a similar analysis for the United States which were reported in the previous issue of this review.     

FINANCIAL ACCOUNTS AND BALANCE SHEETS: ISSUES FOR THE REVISION OF SNA

This paper is an abridged version of a report with the same title originally written for the United Nations Statistical Office, as a part of the ongoing review of the System of National Accounts. Its purpose is to identify the issues in the financial statistics area that need to be considered in the course of the review. Particular attention is paid to problems of harmonization of SNA with related standards of the International Monetary Fund. The 1968 SNA provided a place in the framework for financial accounts and balance sheets, but did not develop them in any detail. In the 19 years since the revised SNA was published, policy and analytic interest in financial questions has greatly increased, and much work has been done on conceptual development and statistical compilation of financial statistics, both within and outside of the SNA framework. It is now apparent that some of the early decisions taken when financial considerations were not the focus of attention need reconsideration, some of the makeshift solutions that have grown up over time are no longer adequate, and some issues that have not been dealt with at all need to be addressed. This paper is not intended to propose solutions, but rather to reflect questions that have been raised, and to present alternatives that have been proposed.