Household final consumption expenditure (POES) is a transaction of the

national account National accounts or national account systems (NAS) are the implementation of complete and consistent accounting techniques for measuring the economic activity of a nation. These include detailed underlying measures that rely on double-entry ...

's use of income account representing

consumer spending Consumer spending is the total money spent on final goods and services by individuals and households. There are two components of consumer spending: induced consumption (which is affected by the level of income) and autonomous consumption (which ...

. It consists of the

expenditure An expense is an item requiring an outflow of money, or any form of fortune in general, to another person or group as payment for an item, service, or other category of costs. For a tenant, rent is an expense. For students or parents, tuition ...

incurred b
resident

household A household consists of two or more persons who live in the same dwelling. It may be of a single family or another type of person group. The household is the basic unit of analysis in many social, microeconomic and government models, and is i ...

s on individual consumption goods and services, including those sold at prices that are not economically significant. It also includes various kinds of imputed expenditure of which the imputed rent for services of owner-occupied housing (

imputed rent Imputed rent is the rental price an individual would pay for an asset they own. The concept applies to any capital good, but it is most commonly used in housing markets to measure the rent homeowners would pay for a housing unit equivalent to the ...

s) is generally the most important one. The household sector covers not only those living in traditional households, but also those people living in communal establishments, such as

retirement home A retirement home – sometimes called an old people's home or old age home, although ''old people's home'' can also refer to a nursing home – is a multi-residence housing facility intended for the elderly. Typically, each person or couple in ...

s, boarding houses and

prison A prison, also known as a jail, gaol (dated, standard English, Australian, and historically in Canada), penitentiary (American English and Canadian English), detention center (or detention centre outside the US), correction center, corre ...

s. The above given definition of HFCE includes expenditure by resident households on the domestic territory and expenditure by resident households abroad (outbound

tourist Tourism is travel for pleasure or business; also the theory and practice of touring (disambiguation), touring, the business of attracting, accommodating, and entertaining tourists, and the business of operating tour (disambiguation), tours. Th ...

s), but excludes any non-resident households' expenditure on the domestic territory (inbound tourists). From this national definition of consumption expenditure may be distinguished the household final consumption expenditure according to the domestic concept which includes household expenditure made on the domestic territory by residents and inbound tourists, but excludes residents' expenditure made abroad. HFCE is measured at purchasers' prices which is the price the purchaser actually pays at the time of the purchase. It includes non-deductible value added tax and other taxes on products, transport and marketing costs and tips paid over and above stated prices.F. Lequiller, D. Blades: Understanding National Accounts, Paris: OECD 2006, p. 126

Components

Household final consumption expenditure includes the following components: * households' purchases of products for their everyday needs (''e.g. food, clothing, cars, rents, personal services)'' * households' partial payments for products provided by the general government (''e.g. tickets to public museums and swimming pools)'' * households' payments to the general government for licences and permits ''(e.g. fees for issuing passports)'' *

s for services of owner-occupied housing * household's own account consumption of outputs produced by unincorporated enterprises owned by households ''(e.g. own-consumption of milk produced on a farm)'' *

income in kind Income in kind, or in-kind income, is income other than money income. It includes many employee benefits and government-provided goods and services, such as toll-free roads, food stamps, public schooling, or socialized medicine. Types of Incom ...

earned by employees ''(free or reduced train tickets for railway employees)'' * households' consumption of

Financial Intermediation Services Indirectly Measured FISIM stands for Financial Intermediation Services Indirectly Measured. In the ''System of National Accounts'' it is an estimate of the value of the services provided by financial intermediaries, such as banks, for which no explicit charges are mad ...

(FISIM)

From household final consumption expenditure to actual final consumption of households

Household final consumption expenditure (HFCE) is not an exhaustive measure of the goods and services consumed by households. Th
general government
an
non-profit institutions serving households (NPISH)
often provide goods and services to households for their individual consumption free of charge or at reduced prices. Examples are health services provided by governments or reimbursed by a social security fund, education services, the part of service provided by public museums, concert halls, operas, swimming pools that is not financed by entrance fees, aid for social housing etc. By adding the general government's and NPISHs' individual consumption expenditure to household final consumption expenditure one receives the actual final consumption of households. Actual final consumption of households excludes the general government's collective consumption expenditure which is expenditure on goods and services that cannot be uniquely attributed to households (e.g. expenditure on defence, safety and order, home affairs, environmental protection, national bodies such as parliament, governments etc.).

Data

In the member states of the European Union the share of household final consumption expenditure (HFCE) in actual final consumption of households usually varies between 70% and 90%. The rest is goods and services consumed free of charge (or at reduced prices) transferred by governments and non-profit institutions serving households to households. A high government share in the provision of individual consumption goods and services is often found in countries known as

welfare state A welfare state is a form of government in which the state (or a well-established network of social institutions) protects and promotes the economic and social well-being of its citizens, based upon the principles of equal opportunity, equita ...

s. Countries with relatively large shares of such transfers in kind are Belgium, Denmark, France, Luxembourg, the Netherlands, Finland and Sweden, where HFCE represents less than 80% of actual final consumption of households for most years. The above observations are based on data downloadable from Eurostat's website:
Household final consumption expenditure per inhabitant in the EU Member States and JapanActual individual consumption per inhabitant in European countries

Notes

References

*Databases **United Nations
National accounts main aggregates database
(incl. household final consumption expenditure), worldwide **Eurostat
National accounts data
(including household final consumption expenditure), member states of the European Union and other countries *Statistical publications on consumption in Europe **Eurostat
GDP per capita, consumption per capita and comparative price levels
in: Statistics Explained, December 2009 **Eurostat
Household consumption expenditure
in: Statistics in focus 2/2013 **Eurostat
Large differences in GDP and consumption per inhabitant across Europe
Statistics in Focus, No. 95/2009 *Further information: **Eurostat
National accounts website
**F. Malherbe
Le site de la comptabilité nationale
(in French language) {{DEFAULTSORT:Household Final Consumption Expenditure National accounts Consumption (macroeconomics) Expenditure

Components

From household final consumption expenditure to actual final consumption of households

Data

See also

Notes

References