rectly into relation with the measuring rod of money” (Pigou, 1920, p.11). He emphasized that the word “can” might mean anything from “can easily” to “can with mild straining” to “can with violent straining.” National accounting practices in most countries lean far more toward those elements that “can easily” be measured in money terms than those that can be measured only with “violent straining.”
Though the national accounts produced by the Bureau of Economic Analysis (BEA) generally exclude activities that do not involve a market transaction or produce a marketed output, there are exceptions—most notably the imputation for the rental value of owner-occupied housing. This imputation is based on assumptions that are approximately as crude as those for, say, valuing the time spent cleaning a house at the price a cleaning service would charge. One reason for making an imputation for the value of owner-occupied housing is to ensure that the accounts are invariant to trends in home ownership (which, incidentally, has increased significantly in the past half-century; see U.S. Census Bureau, 2004). Other imputations for nonpriced, nonmarketed items in the NIPAs include those for wages and salaries paid in kind, food and fuel consumed on farms, and the services provided by banks, insurance companies, and other financial intermediaries that are not reflected in explicit service charges. The imputations for banking services are somewhat unique. In banking, there are observable market transactions that provide an estimate of the nominal value of banking output. Imputations are necessary, however, to allocate the nominal value of unpriced services between borrowers and depositors (see Fixler et al., 2003, for a more complete discussion). We are not aware of any body of analysis that would set the outer bounds of market accounting at precisely the point chosen by the SNA or by the BEA.
One key characteristic of the nonmarket items that are covered in conventional accounting systems is that their consumption is closely related to the sales and purchases of marketed goods and services, making estimation reasonably straightforward if not always precise. For example, the rental value of owner-occupied housing is imputed from observed rents for similar housing. Similar, straightforward imputations could serve as a basis for price estimation for some nonmarket items excluded from coverage in the national accounts but, for many others, such a close comparison will not be possible.
While the national accounts exclude the output resulting from many areas of nonmarket activity, information relevant to these activities often is included. In many cases, purchases of inputs that contribute to nonmarket outputs are treated as expenditures for final demand. Spending on food, cleaning supplies, and laundry detergent is counted as part of personal consumption. In an accounting system that considered meals, house cleaning, and laundry services as elements of consumption, these kinds of expenditures would appear as intermediate inputs to the production of consumption goods. Similarly, government expenditures on education are included in the accounts. These would become intermediate prod-