Beyond the Market: Designing Nonmarket Accounts for the United States

225 Pages·2005·5.51 MB·English

by  National Research Council

Panel to Study the Design of Nonmarket Accounts
Katharine G. Abraham and Christopher Mackie, Editors
Committee on National Statistics
Division of Behavioral and Social Sciences and Education
THE NATIONAL ACADEMIES PRESS
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This study was supported by an unnumbered contract between the National Academy of
Sciences and Yale University and the Glaser Progress Foundation. Support of the work of
the Committee on National Statistics is provided by a consortium of federal agencies
through a grant from the National Science Foundation (Number SBR-0112521). Any
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agencies that provided support for the project.
Library of Congress Cataloging-in-Publication Data
Beyond the market : designing nonmarket accounts for the United States / Katharine G.
Abraham and Christopher Mackie, editors.
p. cm.
Includes bibliographical references.
ISBN 0-309-09319-8 (pbk.)—ISBN 0-309-54592-7 (pdf)
1. Accounting—United States. 2. Social accounting—United States. 3. National
income—Accounting. I. Abraham, Katharine G. II. Mackie, Christopher D.
HF5616.U5B473 2005
339.373—dc22
2004026247
Additional copies of this report are available from The National Academies Press, 500 Fifth
Street, NW, Lockbox 285, Washington, DC 20055; [phone] or [phone] (in
the Washington metropolitan area); Internet, http://www.nap.edu.
Printed in the United States of America.
Copyright 2005 by the National Academy of Sciences. All rights reserved.
Suggested citation: National Research Council. (2005). Beyond the Market: Designing
Nonmarket Accounts for the United States. Panel to Study the Design of Nonmarket
Accounts, K.G. Abraham and C. Mackie, eds. Committee on National Statistics, Division
of Behavioral and Social Sciences and Education. Washington, DC: The National
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PANEL TO STUDY THE DESIGN OF NONMARKET ACCOUNTS
KATHARINE G. ABRAHAM (Chair), Joint Program in Survey Methodology,
University of Maryland
DAVID CUTLER, Department of Economics, Harvard University
NANCY FOLBRE, Department of Economics, University of Massachusetts,
Amherst
BARBARA FRAUMENI, Bureau of Economic Analysis, U.S. Department of
Commerce, Washington, DC
ROBERT E. HALL, Hoover Institution, Stanford University
DANIEL S. HAMERMESH, Department of Economics, University of Texas,
Austin
ALAN B. KRUEGER, Woodrow Wilson School, Princeton University
ROBERT MICHAEL, Harris School of Public Policy, University of Chicago
HENRY M. PESKIN, Edgevale Associates, Nellysford, VA
MATTHEW D. SHAPIRO, Department of Economics, University of Michigan
BURTON A. WEISBROD, Department of Economics, Northwestern University
CHRISTOPHER MACKIE, Study Director
MICHAEL SIRI, Senior Program Assistant
MARISA GERSTEIN, Research Assistant
v
COMMITTEE ON NATIONAL STATISTICS
2004
JOHN E. ROLPH (Chair), Marshall School of Business, University of Southern
California
JOSEPH G. ALTONJI, Department of Economics, Yale University
ROBERT BELL, AT&T Laboratories, Florham Park, NJ
LAWRENCE D. BROWN, Department of Statistics, University of Pennsylvania
ROBERT M. GROVES, Survey Research Center, University of Michigan
JOHN HALTIWANGER, Department of Economics, University of Maryland
PAUL HOLLAND, Educational Testing Service, Princeton, NJ
JOEL HOROWITZ, Department of Economics, Northwestern University
WILLIAM KALSBEEK, Department of Biostatistics, University of North
Carolina
ARLEEN LEIBOWITZ, School of Public Policy Research, University of
California, Los Angeles
VIJAYAN NAIR, Department of Statistics, University of Michigan
DARYL PREGIBON, AT&T Laboratories, Florham Park, NJ
KENNETH PREWITT, School of International and Public Affairs, Columbia
University
NORA CATE SCHAEFFER, Department of Sociology, University of Wisconsin,
Madison
CONSTANCE F. CITRO, Director
vi
Preface
One of the long-standing goals of the Committee on National Statistics
(CNSTAT) is the improvement of economic measurement and the data sources
crucial to that measurement. In working toward that goal, recent CNSTAT panels
have produced reports on price and cost-of-living indexes, poverty measurement,
measurement of the economy’s government sector, and the design of environ-
mental and natural resource accounts. The last report in this list, Nature’s Numbers,
focused on goods and services associated with the environment, which are in
many cases not transacted in markets and hence not captured in conventional
economic accounts. That report did much to set the conceptual stage for this
panel’s broader study of economic activities that are largely nonmarket in character.
This report is the product of contributions from many individuals. The project
was sponsored by the Yale University Program on Nonmarket Accounts which,
in turn, was funded by a grant from the Glaser Progress Foundation. The Yale
program is directed by William Nordhaus, whose long history of pioneering
research in this and related areas—dating back three decades to his work with
James Tobin on measures of economic welfare and continuing through his chair-
ing of the Nature’s Numbers panel—helped to establish the foundations for
this panel’s work. Dr.Nordhaus, along with Martin Collier of the Glaser Progress
Foundation, attended the first meeting and, in articulating their hopes for the
study, helped the panel sharpen its vision of their charge. The panel is grateful
also to Dan Melnick who served as liaison to the panel for the Yale Program and
contributed valuable suggestions and points of clarification along the way.
Many others generously presented material at panel meetings and answered
questions from panel members, thereby helping us to develop a broader and
vii
viii PREFACE
deeper understanding of key methodological and data issues relevant to the con-
struction of nonmarket accounts. The panel especially thanks Steven Landefeld,
director of the Bureau of Economic Analysis, who provided insights based on his
long experience and extensive knowledge of economic accounting; Diane Herz
and Lisa Schwartz, of the Bureau of Labor Statistics, who educated the panel
about that agency’s important new time-use survey; Thomas Juster, University of
Michigan, and Robert Pollak, Washington University, who shared their expertise
on conceptual and measurement issues relating to time use and the theory of time
allocation; Suzanne Bianchi, who provided tabulations of time-use data and in-
formation about the underlying surveys; and Peter Harper, Australian Bureau of
Statistics, and Sue Holloway, Office for National Statistics, United Kingdom,
who informed the panel about some of the exciting work on nonmarket account-
ing underway in other countries.
The meetings of the panel also provided many opportunities for the panel
members to learn from one another. Each of the panel members contributed
indispensable special expertise to the preparation of the panel’s final report.
Katharine Abraham and Robert Hall wrote the first draft of the report’s introduc-
tion; Barbara Fraumeni prepared a description of the existing national accounts
that makes up part of Chapter 2; Daniel Hamermesh contributed a description of
the new American Time Use Survey that also appears in Chapter 2; Nancy Folbre
and Daniel Hamermesh prepared the first draft of Chapter 3, on the topic of
household production; Nancy Folbre and Robert Michael wrote the initial draft of
the material on the role of families in the production of human capital that
eventually found its way into Chapter 4 of the panel’s final report; Barbara
Fraumeni and Alan Krueger took the lead on the preparation of Chapter 5, on
accounting for investments in education; David Cutler and Matthew Shapiro
provided a first draft of Chapter 6, on accounting for investments in health; and
Henry Peskin and Burton Weisbrod worked together on the initial drafts of Chap-
ters 7 and 8, on accounting for the activities of nonprofits and governments and
accounting for the environment. All of the report’s chapters underwent several
rounds of significant revision, reflecting intensive discussion and debate that
involved the full panel, but these productive exchanges could not have occurred
had individual panel members not taken the lead in preparing the first drafts that
served as our starting point.
A special comment is needed about one of our panel members, Barbara
Fraumeni, who is the chief economist at the Bureau of Economic Analysis (BEA).
Although government employees who are technical experts in their fields may
serve on study panels for the National Academies, precautions are taken in such
cases to ensure against real or perceived conflicts of interest. In this case, the
institution recognized both that this panel might make recommendations directly
related to the work of the BEA and that Dr. Fraumeni’s unrivaled expertise on
national economic accounting in general and the U.S. National Income and
Product Accounts in particular would be critical to the panel’s work. After careful
PREFACE ix
consideration of these factors, the institution invited Dr. Fraumeni to serve on
thepanel.
We also note the contributions of two original panel members, Dora Costa,
Massachusetts Institute of Technology, and Daniel Kahneman, Princeton Univer-
sity, who attended meetings early in the panel’s 21/ years of work and provided
2
keen insights that helped the panel to chart its course. We are sorry that they were
unable to continue as active members.
The panel could not have conducted its work without an excellent and well-
managed staff. Andy White was the director of CNSTAT at the time the panel
was formed, and we appreciate his support for the panel’s work. Project assistants
Michael Siri and Marisa Gerstein provided excellent administrative, editorial,
and research support. The panel also benefited from the work of Eugenia Grohman
and Kirsten Sampson Snyder, both of the Division of Behavioral and Social
Sciences and Education, who were responsible for editing the report and oversee-
ing the review process.
The entire panel owes a special debt of gratitude to Christopher Mackie, the
panel’s study director. During the course of the panel’s deliberations, he played
an invaluable role in facilitating communication among panel members, drawing
the panel’s attention to relevant studies that we might otherwise have overlooked,
helping to develop the structure for the panel’s final report, and directing the
panel’s attention to gaps and inconsistencies in the discussion of different topics
that needed to be addressed. Over the past year, in collaboration with various
panel members, he read and reworked each of the report’s chapters multiple
times, making improvements on each pass and helping to turn an initially dispar-
ate set of individual chapter drafts into a more integrated whole, and then
shepherded the report through the final review process. For me personally, work-
ing with Chris was a great pleasure, and I know I speak for the entire panel in
expressing my gratitude to him for his dedicated professionalism, reliable good
cheer, and many substantive contributions.
The report has been reviewed in draft form by individuals chosen for their
diverse perspectives and technical expertise, in accordance with procedures
approved by the Report Review Committee of the National Research Council
(NRC). The purpose of this independent review is to provide candid and critical
comments that will assist the institution in making the published report as sound
as possible and to ensure that the report meets institutional standards for objectivity,
evidence, and responsiveness to the study charge. The review comments and
draft manuscript remain confidential to protect the integrity of the deliberative
process.
We thank the following individuals for their participation in the review of
this report: John C. Bailar, III, Department of Health Studies (emeritus), Univer-
sity of Chicago; Robert Haveman, Department of Economics, University of
Wisconsin-Madison; J. Steven Landefeld, Bureau of Economic Analysis,
Washington, DC; Arleen Leibowitz, Department of Policy Studies, University of