From: Alejandro Valle Baeza (valle@SERVIDOR.UNAM.MX)
Date: Sun Dec 25 2005 - 15:33:28 EST
Jurriaan Bendien wrote: > As we know, the official national accounts concept of value-added > includes > the imputed rental value of owner-occupied housing (OOH). This is the > average market-based rent that all domestically resident owner-occupiers > together would get, "if" they rented out their housing, and it is a > component of GDP (gross value added), whether measured according to > income, > product, or expenditure method. Some feminist theorists complain that the > value of housework is not included in GDP, but, it could be argued at > least > you have this imputed rent included. > > Of course, in reality, most owner-occupiers do not rent out their > housing, > precisely because they occupy it themselves, either freehold or paying > mortgage to a financial institution (though some might rent out part > of the > house etc.). It's an imputation only, which does not measure any really > existing transaction volume, and strictly speaking, it's a fiction that > makes sense only in terms of a value theory in neoclassical economics, > according to which people earn rents from property ownership although > they > don't earn them (the treatment of rents in national accounts is a > separate > story; in general, you can say that, if business enterprises rent more > productive assets rather than owning them, GDP is reduced, and vice > versa, > if they own more, GDP is increased; conceptually land rents, subsoil > rents > and rents in respect of financial assets are excluded altogether from > GDP, > and do not enter into the conventional national income measures). > > However, what now is the real magnitude of the effect of OOH? From the US > online NIPA data set conveniently provided by the Bureau of Economic > Analysis, one can get figures to assess the overall quantitative > implication > for the output total (annual figures in billions of current US$ and > rounded > percentages to one decimal point; I've used Table 7.4.5 for OOH). > > 1960 OOH = 31.3 GDP = 526.4 percentage contribution of OOH to GDP = > 5.9% > 1970 OOH = 61.3 GDP = 1,038.5 percentage contribution of OOH to GDP = > 5.9% > 1980 OOH = 178.4 GDP = 2,789.5 percentage contribution of OOH to GDP = > 6.4% > 1985 OOH = 280.8 GDP = 4,220.3 percentage contribution of OOH to GDP = > 6.7% > 1990 OOH = 412.8 GDP = 5,803.1 percentage contribution of OOH to > GDP = > 7.1% > 1995 OOH = 531.2 GDP = 7,397.7 percentage contribution of OOH to GDP = > 7.2% > 2004 OOH = 1,145.2 GDP = 11,734.3 percentage contribution of OOH to > GDP = > 9.8% > > As you can see, the fraction keeps creeping up, and soon it will be > double > what it was in 1970, first breaking that magic 10% of US GDP barrier, > especially given that home ownership among the US population has, with > easy > credit, strongly increased (in 2004, there were 112 million US > households of > which 77 million were privately owned, i.e. 68.8%. In 1976, the earliest > year for which I could find census data, it was about 42.7%. > > So anyway, as you can see, just as with business enterprises, if more > people > *own* homes rather than *rent* them, official total productivity measures > increase, and official total net output and GDP goes up. Yeah, you can > say > OOH!! > > Jurriaan > > It's been a hard day's night, and I've been working like a dog > It's been a hard day's night, I should be sleeping like a log > But when I get home to you, I'll find the things that you do > Will make me feel alright... > > > Jurrian, thank you for this interesting post. Do you know how this imputed rental value chek with final demand GDP calculations? Muchos saludos Alejandro -- Posgrado Facultad de Economía Av. Universidad 3000 Circuito interior México 04510, DF México Tel. 55-56222148 fax 55-56222158 Página web: http://usuarios.lycos.es/vallebaeza
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