Consumption of households

Final consumption consists of using goods and services to satisfy individual or collective human needs. There are two ways of presenting final consumption depending on whether the focus is on the units that incur the expenditures or those that benefit from them.

Final consumption expenditure

The purpose of the notion of final consumption expenditure (P3) is to identify the units that bear consumption expenditures, and that control and finance their amounts. Final consumption expenditure includes expenditures actually made by resident institutional units to acquire goods and services destined for final consumption. Only households, general government and non-profit institutions serving households (NPISH) bear final consumption expenditures. These expenditures can be made on the economic territory or in the rest of the world.

The final consumption expenditure of households includes a few special cases corresponding to situations in which households themselves produce the goods and services that they consume. For example, the housing services produced by homeowners who occupy their own dwelling are recorded as the homeowners' expenditures, the amount of which is equal to their production. Additionally, it is the households - rather than their employers - who make the final consumption expenditure corresponding to the goods and services received in the form of payment in kind.

The final consumption expenditure of households does not include expenditures that are partially or fully covered by social transfers in kind. For example, in the final consumption expenditure of households, only the share of health expenditure that is not reimbursed is counted; the reimbursed share is counted in the final consumption expenditure of general government.

The final consumption expenditure of general government comprises two parts. It includes firstly collective expenditures (P32), corresponding to general government's activities: justice, defence, police, economic administration, etc. It also includes all the government spending which ultimately benefits households: these individual consumption expenditures (P31)correspond to consumption expenditures in the following activities: general social security activities; non-market education; non-market health; housing benefit ; benefit without housing; non-market creative and artistic activities; libraries, museums and other non-market cultural activities; non-market recreational and sport activities.

By convention, the final consumption expenditure of NPISH is only individual.

Actual final consumption

The purpose of the notion of actual final consumption (P4) is to identify the units that actually acquire or receive the consumer goods and services and benefit from their use. For households, it broadens the scope of final consumption expenditure. It includes all the goods and services acquired by resident households to directly satisfy their needs, whether or not these acquisitions have involved any spending on their part.

Therefore, as well as the goods and services acquired by means of their own final consumption expenditure, actual household final consumption comprises the goods and services which, having been the object of an individual consumption expenditure by general government and NPISH, give rise to social transfers in kind from these institutions towards households. The actual final consumption of general government and NPISH is their final consumption expenditure minus the amount of social transfers in kind. The actual consumption of general government is thus limited to its collective consumption expenditure, while the actual final consumption of NPISH is null.

For the economy as a whole, final consumption expenditure and actual final consumption are equal to each other.

The notion of actual household final consumption allows international comparisons between countries that finance health and education expenditure in different ways.

Moment of recording and evaluation of final consumption

Final consumption expenditure is recorded at the moment when ownership of the good is transferred or when the service provision is finished. It is counted at the purchase price actually paid by the buyer, including taxes on the products (VAT and others).

Territorial correction

Resident households consume abroad (i.e. French tourists abroad) and, conversely, non-resident households (i.e. foreign tourists in France) consume on the economic territory. Because of the estimation methods used in the national accounts, consumption expenditures broken down by product do not include the expenditures of residents abroad but do include those of non-residents on the economic territory. To obtain the total final consumption expenditure of resident households, a territorial correction is made to the sum of expenditures by product. This correction is equal to the consumption expenditure abroad of resident households minus the final consumption expenditure on the economic territory of non-resident households. This correction is structurally negative, since the tourism balance used as the basis for this correction is structurally strongly positive for France. This correction is only known globally: it is not broken down by product.

Household consumption detailed by product, by purpose and by durability

The final consumption of households series are produced in three different classifications. Each one is suitable for a specific use.

1. The product classification:

The product classification is the most detailed and includes around 460 elementary items. It classifies expenditure according to the manufacturing process and the material (textile, wood, chemical...) of the object consumed. It distinguishes goods from services, and market sector from non-market sector.

It is composed of the most aggregated groupings used in the national accounts: levels A10, A17, A38 and A88. This classification should be used when referring to production, for market studies, or when making comparisons with turnover figures.

2. The purpose classification:

The purpose classification is a classification of expenditures according to satisfied consumption needs. Food and non alcoholic beverages; alcoholic beverages, tobacco and drugs; clothing and footwear; housing, water, heating and lighting; furniture, housing equipment and current maitenance; health; transport; communications; leisure-culture; education; hotels, cafés and restaurants; other goods and services form the twelve main purposes. The thirteenth item in the purpose classification represents the individual consumption expenditures of non-profit institutions serving households (S15), the fourteenth groups together the individual consumption expenditures of general government (S13) and the fifteenth is the territorial correction.

Through a few conventions, this classification groups together complementary products, goods and services, i.e. those that are simultaneously required to satisfy the same need. For example the "transport" purpose groups together vehicle purchases, vehicle maintenance and repair costs, fuel consumption, rail and road transport expenditure, and lastly air transport.

Such a presentation lends itself well to the study of household behaviour. This is why it is used in consumption models and in the calculation of consumption elasticity with regard to income and to prices. This presentation should be used in particular for analysing medium- and long-term consumption. Furthermore, the purpose classification is the international COICOP classification which therefore allows comparisons between countries. It is used in the publications of the United Nations (UN), the Organisation for Economic Cooperation and Development (OECD) and Eurostat, the European Community statistical office.

3. The durability classification:

The durability classification is a classification of expenditures according to the durable nature of the goods and services acquired. It sets durable goods against fungible goods and distinguishes goods from services. It classifies goods into three groups: major durables (vehicles, furniture, household or leisure equipment), semi-durables (textile, clothing) and non-durables (food, energy). This classification is useful for short-term economic analyses.

Simplified and detailed tables of actual final consumption

Simplified tables present series of consumption by product, purpose and durability in a synthetic way. Detailed tables present available results at the lowest level and at higher levels. The code number allows to know precisely the fineness level of the considered information.