7.2 Augmented measures of saving
National saving
As discussed in section 6.3, conventional measures of saving do not take account of a range of public and private expenditure that would be counted as saving from an economic perspective. An economic definition of expenditure would regard expenditure that generates a flow of services over time, extending beyond the current accounting period, as part of foregone current consumption (or saving).
| Gross national saving rate in 2001 | 15.7 |
|---|---|
| Adjusted for: | |
| Government education expenditure | 6.0 |
| Government health expenditure (30 percent) | 2.0 |
| Household education expenditure | 0.9 |
| Household health expenditure (30 percent) | 0.3 |
| Research and development (80 percent) * | 0.8 |
| Durable consumer goods (80 percent) | 11.2 |
| Augmented gross national saving rate | 36.8 |
| Adjusted depreciation | -23.9 |
| Augmented net national saving rate | 12.9 |
Source: Statistics New Zealand, The Treasury, Ministry of Research Science & Technology and authors’ calculations.
* Gross national expenditure on research and development are for 1999/2000.
To construct a measure of saving that is more closely related to the economic definition of saving we make the following adjustments to the gross national saving rate. 30 percent of all health expenditures are allocated to saving, as are all education expenses. [25] Research and development expenditure and consumer durables are counted as an investment and 80 percent are added back into saving. The results are reported in Table 7.1. With these adjustments, the gross national saving rate for 2001 increases from 15.7 percent to about 37 percent of GDP.
To calculate the net national saving rate we subtract depreciation adjusted for the fact that consumer durables are now counted as investment.[26] This leads to a net national saving rate of about 13 percent, which is substantially higher than the rate from the national accounts of 2.1 percent.
Economic measures of national saving are likely to be much higher than the widely cited figures from the national accounts that are often used to imply a “poor” saving performance in New Zealand. Furthermore, it seems probable that augmented measures have not declined to the same extent as the measured rate because, for example, education and health expenses as a share of GDP have been increasing.
The finding that extended measures of national saving are likely to greatly exceed measured rates is borne out by similar estimates for other OECD countries. Results for four countries are given in Table 7.2 for the 1980s.
|
United States |
United Kingdom |
Canada | France | |
|---|---|---|---|---|
| Gross national saving rate in 1980-89 | 16.3 | 16.6 | 20.7 | 20.4 |
| Adjusted for: | ||||
| Total education expenditure | 4.6 | 5.2 | 7.4 | 5.5 |
| Research and development | 2.4 | 2.0 | 1.2 | 1.8 |
| Durable consumer goods | 5.5 | 4.7 | 6.3 | 3.8 |
| Augmented gross national saving rate | 28.8 | 28.5 | 35.6 | 31.5 |
| Adjusted depreciation | -12.6 | -11.2 | -11.2 | -11.9 |
| Augmented net national saving rate | 16.2 | 17.3 | 24.4 | 19.6 |
Source: Shafer, Elmeskov and Tease (1992).
