Household Income - National Accounts Adjustment

National Accounts Adjustment

To keep the data accurate and up to date, incomes have been extrapolated to adjust for undercounting and time, to the year 2010. To adjust for undercounting, the original datasets are aggregated to the national level and then compared to the disposable household income National Accounts aggregate gathered from the OECD. The latter is more accurate because it captures all income and not just that which is reported to a survey or tax authorities. For instance, National Accounts data includes an adjustment for exhaustiveness in self-employment income and wages and salaries, i.e. income that is hidden from authorities. To this end, as both are part of GDI and GNI, Eurostat checks and audits member countries to make sure all components are exhaustive and include all the adjustments needed. Also, National Accounts data will include all social benefits, whether taxable or not, all income taxes paid, and (normally hard to estimate) interest and dividend income data. Data on social benefits in the National Accounts are measured directly from government authorities, meaning accuracy is guaranteed. The National Accounts data on which the comparison is made adjusts the disposable income variable (B6) to not include imputed rents, property income of pension and non-life insurance entities, insurance proceeds, and to subtract only mandatory taxes and social contributions.

Growth between 2004 and 2010 was calculated by taking 2004 income, subject to the overall definition agreed to on this page, and 2010 income, and then adjusting by changes in PPPs, number of households, and household size. The percentage change is then reported here. Therefore this method is an approximate extrapolation of 2010 income. It is not exact, because the growth is based on change in household income adjused for changes in household size using household weights, however, equivalised income is based using person weights. Given the slight differences in distribution between household income using both weights, one would expect small differences between the extrapolated figure and an "actual" figure derived using person weights, as household income using person and household weights are usually close together. In Australia, the two differ by less than 3%. Note that Poland and South Korea were excluded from this exercise due to lack of data.