Definition: Household budget survey (HBS)
The purpose of conducting a Household Budget Survey (HBS) in a broad sense is to give a picture of living conditions of private households in a defined area and time. The aims of the survey are, to give a picture of the total consumption expenditure of private households and groups of private households, broken down by household characteristics such as income, socio-economic characteristics, size and composition, degree of urbanisation, region and so no. HBS data are often used to compile weights for the calculation of consumer price indices (such as the HICP) or for the compilation of national accounts. Two thirds of the EU Member States carry out annual surveys and the remainder have five-yearly or longer intervals between surveys. Probability sampling is used in the large majority of surveys in the Community. High incidence of nonresponse is a common and major problem.
All HBSs are confined to the population residing in private households. Collective or institutional households (old persons' homes, hospitals, hostels, boarding houses, prisons, military barracks etc.) are excluded, as are generally persons without a fixed place of residence. Data collection involves a combination of (a) one or more interviews, and (b) diaries or logs maintained by households and/or individuals, generally on a daily basis. The main diary or diaries are used to record the household's consumption expenditure and the main interview(s) aims to get substantive information on household characteristics and income. The length of the intensive recording period varies from only a quarter of a month to 30 days. In retrospective interviews or self-reporting, a range of reference periods are used, such as one month for frequent items and a whole year for infrequent items. The use of a longer reference period increases the precision of the information obtained however it also tends to increase bias due to recall errors.
Given that HBSs are output harmonised, Eurostat does not emphasise the use of the same questions, the same survey structure or the same sample designs in the surveys, but importance is put into harmonising concepts and definitions. The basic unit of data collection and analysis in HBSs is the household. The household can be defined as a social unit, which meets one or more conditions of living together (such as the criteria of sharing expenses or daily needs) in addition to having a common residence. This is the household defined as a housekeeping unit. The use of alternative definitions, based, for example, on the pooling of income and resources, or the existence of family or emotional ties, affects the average household size and composition, as well as the coverage achieved in the survey.
It is important to identify the reference person (often the head of the household) whose personal characteristics can be used in the classification and analysis of information on the household. The socio-economic group, occupation and employment status, income, sex and age of the reference person is often used to classify and present results. For the HBS it is recommended that the reference person should be the one contributing most to the total income of the household (main income earner).
The distinction between adults and children influences the classification of households by type -for example, whether a couple with grown-up children is classified as a nuclear couple with children household or as a more complex type containing a couple, children and other adults. For the HBS a child is generally aged less than 16 or aged 16 to24, economically inactive and living with at least one parent.
To take account of economies of scale, household expenditures can be expressed per adult equivalent. This allows expenditures to be compared between households of different sizes. The first adult in the household gets a weight of 1, each adult thereafter (aged 14 and over) a weight of 0.5 and each child a weight of 0.3.
The expenditure effected by households to acquire goods and services is recorded at the price actually paid, which includes indirect taxes (VAT and excise duties)borne by the purchaser.
The household's internal production constitutes one of the non-monetary components of consumption and it is recommended to include this measure in HBSs. This involves goods produced directly by the household through either a private activity, or a professional activity, for example own production of food (by a farming household or by a household with a vegetable garden) or withdrawals from stocks for the household of trades men. This production is usually valued at the retail price, as if the product would have been bought in a shop. Internal production should ideally be recorded at the time it is actually consumed but country practices may differ from this.
Benefits (or incomes) in kind provided by employers in exchange for work are included as consumption since the benefit in question is consumed by the household. Transfers in money between households are not related to consumption by the household concerned and theoretically should be excluded. From a consumption expenditure point of view, the cash price for items bought on credit is preferred. It is recommended to use the moment of delivery of the good as the determinant for the recording of the consumption expenditure. In order to obtain an evaluation of the standard of living from the expenditure carried out, the purchase of second hand goods is recorded in the same way as other consumption expenditures.
The comparability of HBS data is least good in the fields of health and education owing to the differences in the social protection and educational systems of the Member States. The consumption heading of health is of great importance in determining the standard of living of households, thus differences in treatment can skew international comparisons. Whatever methods are used, it seems difficult to reach a good level of international comparability in these domains.
Eurostat, "Consumers in Europe, Facts and Figures – Data 1999 – 2004", Office for Official Publications of the European Communities, Luxembourg, 2005