Given that limitations of the NIPAs have long been recognized, why is this report needed at this time? Few would dispute the existence of economically valued nonmarket inputs and outputs. Examples are easy to find: the higher value of a house sold after home improvements are made by the homeowner, the development of attitudes and skills that have value in the marketplace resulting from nurturing that takes place in the family, and so on. Yet, we do not know how to measure or value much of what constitutes nonmarket production.
The Panel to Study the Design of Nonmarket Accounts was charged with evaluating current approaches, determining priorities for areas of coverage, examining data requirements, and suggesting further research to strengthen the knowledge base about nonmarket accounting.
An overarching question for nonmarket account design is scope—where in the range of economic-related activities to draw the border of inclusion. The panel recommends the development of satellite accounts that cover productive inputs and valuable outputs that are not traded in markets, focusing on areas for which improved accounting would contribute to better policy making and to science. These accounts would provide a framework for examining difficult-to-measure activities that are excluded, or inadequately treated, in the NIPAs. Though one objective of nonmarket accounting is to support alternative aggregate measures of economic performance, satellite accounts are not intended to replace the current national accounts but to exist alongside them. Most of the work proposed by the panel would be conducted on an experimental basis and would not change the way the headline GDP is estimated.
While acknowledging that different users require different kinds of data and that new methods may be developed for valuing outcomes previously considered noneconomic, it is the panel’s view that resources should initially be directed toward developing a more complete accounting of the population’s productive activities rather than attempting to measure happiness or well-being. Throughout the report, the panel defends this position on practical measurement, as well as conceptual, grounds. Because improving output (and corresponding input) measures is a prerequisite to any vision for an expanded set of accounts, this is where the panel focused its energies.
The potentially valuable areas of nonmarket accounting are at different levels of development with respect to measurement concepts and available data. For that reason, the panel favors a staged approach. In general, the panel emphasizes areas for which new data sources offer opportunities to improve measurement of inputs or outputs, and excludes areas for which the likelihood of developing credible valuation estimates seems especially low. The staged approach allows work to proceed without commitment to a rigid framework, which might be difficult to agree upon across different areas of interest. Experimental methods—