Household budget survey

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Purpose and history
The purpose of the survey is to give information on the economic conditions of the private households - incomes, savings as well as consumption. Consequently, the survey can be characterized as a survey of living standards ands of general economic conditions.

The survey has been conducted at varying intervals since the late 19th century. From 1994 the survey was subjected to substantial methodological changes, and the survey is now conducted on an annual basis in a way that makes comparisons possible.

Similar surveys are conducted in most other countries.

Other statistical products give information on topics in the household budget survey, e.g.:

• The national accounts give information on private consumption - but the figures from the household budget survey are more detailed, and they can be grouped by household types.
• The income statistics give information on household income - but the income concept in the household budget survey is broader and covers also untaxed incomes.
• The general statistics on households, housing, etc. give information on households and on housing - but the household concept in the household budget survey differs slightly, as it is based the own definition of the household.

In general, it is recommended that the household budget survey is only used (based on a sample) in cases, where the information needed cannot be found in other (register-based) statistical products.

Description of Contents
The survey gives detailed information on the economic conditions of the households. The following main topics are covered in an exhaustive and comprehensive way:

• Consumption
• Incomes
• Stock of durables
• The use of health-, education- and child care services
• Pension schemes
• Direct taxes
• Taxes on imports and production
• Indirect transfers from the public - i.e. the transfers, which the household receives without paying the total costs for the services.

This information can then in a great variety of ways be combined with background information on the households, among this information is:

• Household size and composition
• Household income
• Housing conditions
• Level of education
• Geography
• Etc.

Statistical Concepts

Units and population:

The household budget survey examines the economic conditions of private households. Consequently, consumption is recorded in value, not in volume.

The survey examines the actual economic conditions of the households. Questions about attitude or opinion are not collected.

A private household is defined as an economic unit: A group of persons living together and having a high degree of common economy - that is sharing incomes and expenses. In 2004, there were 2.553 million private households in Denmark (estimated by the Household Budget Survey).

Persons living in different kinds of shared households (prisons, hospitals, some institutions etc.) are excluded, since it is typically impossible to distinguish the private economy from the shared economy. For some of the survey variables, it is important to have this exclusion in mind, e.g. for analyses of the use of hospital services (as more permanent hospitalized persons are not covered).

In principle, the latest survey covers 5.365 million persons of the total population of 5.405 million persons in 2004.

It is the private economy that is examined. Goods consumed in a production process (plant and machinery etc.) and other company-related expenses are not covered.

The household concept in the Household Budget Surveys differs from other concepts used by Statistics Denmark. In the register-based statistics, households are either defined as persons living at the same address, or as persons connected by different bonds (marriage, common children etc.). In the Household Budget Survey, the definition is made by the involved household itself in co-operation with the interviewer.

In most cases, there is no difference between the different definitions, but in some cases a lodger will be included in the main household in the register-based statistics, while the lodger who has a separate economy constitutes a separate household in the Household Budget Survey. In the typical statistics from the survey, no distinction is made between married and non-married couples, and no distinction is made between couples of different or same sex. Furthermore, it is not important if a person is registered at a specific address at the national registration office. It is the actual situation when the interviewer visits the household that is important.

While the data in the survey is normally per household, it will in many cases be relevant to look at the data per person or by equivalence unit.

E.g. it is not meaningful to compare an average household whose yearly income is over DKK 800,000 and whose total consumption amounts to DKK 429,000, while an average household whose yearly income is under DKK 150,000 and whose total consumption only amounts to DKK 113,000. This is due to the fact that the first household type consists of 3.2 persons, while the latter consists of 1.0. Consequently, more people share income and consumption in households with higher income.

For analytical purposes it can therefore be relevant to look at the consumption per person in this case the consumption in households with higher income will be DKK 134,000 per person, while the household with lower income uses DKK 113,000 per person for consumption.

In a welfare analysis conducted on the basis of consumption per person, it is indirectly assumed that all persons have the same needs, regardless of the household type to which they belong.

To make a better comparison between households of different size and composition, consumption etc. can alternatively be calculated by equivalence unit. The reason is that households consisting of several persons have certain large scale advantages. A household with several persons are able to share a part of the dwelling area and installations, it may makke large scale shopping cheaper, every person in the household does not need a car etc. To obtain a similar welfare level, a household with 2 persons does not need to have a twice as large consumption as a household with 1 person. Furthermore, it is implied that children do not need to have the same consumption level as adults, to obtain the same welfare level.

To compare the welfare level between different household types, an equivalence scale can be used. This type of scale is designed to recalculate the welfare effect of consumption or income of different households. The main unit is the adult equivalent - that is the consumption in a household consisting of precisely 1 adult. There is no unambiguous way to define such a scale, so on the basis of international recommendations Statistics Denmark has decided to define the equivalence unit in the following way:

The first person over 14 years old counts for 1, other persons over 14 years count for 0.5 and children 14 years old or lower count for 0.3. A household consisting of 2 adults and 2 children therefore consists of 2.1 equivalence units. This scale is called the modified OECD-scale.

Re-estimated using this scale a household with an income of 800,000 consists of 1.9 equivalence units, while a household with an income of up to DKK 150,000 consists of 1.0 equivalence unit. The consumption per equivalence unit is therefore DKK 226,000 in the first household type and DKK 113,000 in the latter.

This way of defining the scale is subjected to discussion. It may be claimed that the scale should be graduated even more by the age of the person, that the large scale effect should be graduated and so forth.

While consumption is collected by household, other parts of the survey are collected by person. This applies to incomes, taxes, data about pension schemes and the use of public services etc.

Variables:

Wages and salaries etc. consists of wages and salaries before tax is paid, employers and employees payments to pension schemes, including ATP (Danish Labour Market Supplementary Pension Scheme), as well as salaries in non-monetary forms e.g. paid for car, dwelling etc.

Entrepreneurial income etc. consists of profit from self-employed occupations. Investment income regarding the business is included, while interest expenses are excluded. The item can sometimes contain values below zero either because the business as such has a deficit or because the interest expenses have been large. Furthermore, self-employed person consumption of own goods from production or shop (e.g. farmers or grocer) is included, as well as income from undeclared work.

Property income contains income from private investments and stocks etc. Furthermore, the imputed rent for owner-occupied dwellings and secondary residence are included. On the other hand, increase in value (either realized or not) of capital goods such as securities and real estate is not included.

Private transfer income contains received presents and winnings, payments from insurances etc. as well as payments from private pension schemes (including ATP) and received child maintenance and alimony.

Public transfer income contains payments from public pensions, unemployment benefit and other unemployment fund payments, sickness benefit, cash benefit, study benefit, housing benefit as well as child benefit.

Other incomes and balancing contains several minor types of income, as well as balancing as a result of difference in periods between different types of data. The value may sometimes be below zero.

These incomes add up to the gross income.

Besides these types of more current incomes, the household also may receive capital transfers, such as inheritance, payments from the Dannish Employees Capital Fund, one-time payments from ATP etc.

The sum of the gross income and capital transfers constitutes total income.

From the total income income taxes etc. (direct taxes) are paid, which include ordinary income taxes, labour market contributions, taxes regarding inheritance, housing and presents as well as payments to unemployment insurance.

Furthermore, private interest expenses etc. are paid, in which especially interests regarding housing are of importance. Also other compulsory transfers are included, such as paid child maintenance, alimony, compensation etc.

The total income minus income taxes and private interest expenses constitutes the disposable income.

Adding the net sum from received capital pension to the disposable income equals the central concept disposable amount.

The disposable amount can be used to pay different fines that is a payment, which is similar to taxes.

It can also be used for presents and charity towards other households or charity organizations.

It can be used to pay for subscriptions to associations (non-profit organizations regarding households), including labour unions, sport associations etc.

The household can also use there disposable amount as savings, which can be divided into four types:

• Payment for pensions schemes and ATP (Danish Labour Market Supplementary Pension Scheme). This includes all types of pension schemes, private as well as types organized through an affiliation at the labour market.
• Payment for private life insurances etc.
• Value of extension and rebuilding etc. of the dwelling or secondary residence as well as expenses regarding building of a new dwelling considered to be investments regarding the dwelling. According to international recommendations, expenses regarding buying or selling of the dwelling are included (e.g. the real estate agents fee). However, the buying or selling price in itself is excluded.
• Other kinds of savings, which are calculated as a residual, and cover all other forms of positive or negative savings, including repayment on loans on owner-occupied dwellings, consumer credits, student loans, savings or loans in banks etc.

Please note that in spite of payments to pension schemes, they are included as positive savings, payments from pension schemes are regarded as income and not as negative savings. The reason is that for the individual person, there is no direct relationship between the contribution to and the payments from the pension scheme, because it depends, among other things, on the expectancy of life for a person.

The remaining part of the income is used as consumption.

• The major part is paid consumption of goods and services. Note that goods bought by instalment are included as the total cash price (excluding credit costs). Repayments are, on the other hand, not included as consumption but as saving. Private sale of personal property is included as negative consumption. This is especially important concerning cars, where it is common to pay a part of the new cars price by means of the sales price of the old car.
• The imputed rent for owner-occupied dwellings and secondary residence are included as consumption.
• Furthermore, also types of non-monetary incomes are included (paid for car, telephone as well as self-employed persons consumption of own goods).

As supplement to these main aggregates, also data about indirect contributions from the authorities, which are indirectly received by the households when using public services as child care, education and health care, which is free of charge or is subject to a price reduction, are available.

Furthermore, data about production- and import taxes (indirect taxes) paid by the households are available, i.e. taxes and duties imposed especially on the consumption, but also extension and rebuilding of the dwelling, such as VAT on building materials etc. and stamp duty regarding buying and selling of dwellings.

When including the indirect contributions and production- and import taxes, it is possible to monitor the economic transactions between the households and the authorities:

• To the household from the authorities: Direct transfers, i.e. public transfer incomes + indirect contributions.
• From the households to the authorities: Income taxes + production- and import taxes.

Especially the indirect contributions are difficult to interpret. It makes no sense to claim that at person being hospitalized over a longer period, and therefore having received a large indirect contribution, has a welfare gain in comparison with a healthy person. Furthermore, it is worth noticing that only some but essential types of contributions are included. A major drawback is that it has not yet been possible to include public contributions towards medicine.

Statistical measurements:

The typical statistics from the survey are given as an average in DKK per household per year.

Groupings:

Consumption as well as incomes can be grouped at different levels of detail. The consumption can for instance be classified to between 11 and 1,200 groups.

  Read more about the statistics on 'Household Budget Survey' in our Declarations of contents

Releases

Last updated:	11 March 2010
Scheduled releases:	9 March 2011 for the period 2007-2009

Contact

Dorthe Jensen
Telephone:	+ 45 39 17 35 72
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