PN 2017-06

Why Differences in Household Expenditure Estimates Matter

Government estimates obtained from sample surveys, such as the Family Income and Expenditure Survey (FIES), and national accounts have wide discrepancies across time, with their divergence generally growing. Such discrepancies have consequences to policy. For instance, poverty can be overestimated if survey-based estimates are biased downward. This Policy Note finds that this discrepancy is partly conceptual. In terms of coverage, FIES only includes individual households while the household final consumption expenditure, a typical estimate from national accounts, also covers institutional households. More so, taxes are considered part of household expenditure in FIES, but not in national accounts. The study also identifies undercoverage of wealthy households and other measurement errors as factors behind the inaccuracies. It calls for the provision of an acceptable protocol for triangulating information from both estimates of national accounts and the survey. It also encourages the Philippine Statistics Authority to recognize other data collection protocols, including special surveys for tracking and monitoring income and expenditure patterns of the missing wealthy.

Authors: Albert, Jose Ramon G. Asis, Ronina D. Vizmanos, Jana Flor V.
Keywords: Philippines household spending FIES Family Income and Expenditure Survey household final consumption expenditure government estimates poverty estimates national accounts
Focus Area: Economic outlook
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