Government spending represents about 18 percent of U.S. GDP. These expenditures go toward provision of goods and services ranging from defense to the judicial system to education. GDP excludes the transfer payment components of government spending (social security, welfare benefits, unemployment benefits, and so on).
Statistical agencies have made some attempts to measure government output directly rather than indirectly. Jenkinson (Organisation for Economic Co-operation and Development, 2003) offers a summary of international efforts, most of which aspire to the SNA recommendation to pursue direct volume measures, as opposed to the traditional input-based methodology. Atkinson (2004) provides an interesting review of the United Kingdom’s efforts in this regard. Sectors typically covered as countries begin to develop direct measures of government output include education—where measures such as number of pupils and pupil hours are calculated—and health—where indicators include such things as number of patients and hospital treatments. But valuation of these outputs is difficult. Observed prices, even when they are positive, as with hospital charges to health care insurers, may well be of limited usefulness. In the case of health care, for example, because patients confront far lower marginal prices than do insurers but also confront a variety of nonprice rationing mechanisms, the marginal value to the patient of treatment provided could be either lower or higher than its cost. In work discontinued in the mid-1990s, The BLS developed measures of output for selected federal government agencies as part of its government productivity measurement program. These output measures typically relied on quantity indicators of one sort or another (Fisk and Forte, 1997). Work to measure government output for the United States is currently under way at the BEA (see Fraumeni et al., 2004); the goal of this work is monetary valuations.
In a similar spirit, the SNA categorizes physical output measures for 11 nonprofit sector groups (United Nations, 2003):
culture and recreation;
education and research;
development and housing;
law, advocacy, and politics;
philanthropic intermediaries and volunteerism promotion;
business and professional associations, unions.
Each of these groups contains numerous fields, subfields, and target physical output measures. Several countries—including Australia, Belgium, Canada, Italy,