Growth, climate sustainability, redistribution: what can we learn from the “augmented accounts”?

Today, INSEE is publishing the first augmented national accounts. This innovation aims to provide a single view of economic activity, its impact on climate change, and the distribution of household income.

The approach is twofold. Firstly, the aim is to provide a coherent set of data that will enable joint analysis of the economic, social and environmental dimensions. Secondly, on an exploratory basis, INSEE is proposing synthetic indicators that cross these dimensions, which can complement the usual indicators such as GDP and deliver different messages from them.

With regard to the distribution of household income, some results, such as the percentage of households getting a net benefit from “extended” redistribution (57% in 2022), repeat and update recent work. With regard to climate change, the reconciliation of economic data and greenhouse gas emissions makes it possible to analyze trends – generally downward – in the carbon intensity of major economic aggregates (GDP, imports, etc.), both in the short or long term, in terms of domestic emissions or footprint.

Other results are new and experimental, such as the evaluation of a net domestic production adjusted for the cost of greenhouse gas emissions, which is more than 4% lower than the usual measure, or the estimation of an adjusted net saving, which is durably negative and signals a lack of sustainability.

Today’s challenges call for a joint examination of the economic, social and environmental dimensions of the same issue. The Augmented Accounts program, announced in a previous blog post, seeks to meet this expectation. It aims to articulate national accounting information, which is the benchmark for measuring economic performance, with other essential questions. Two of these issues at the heart of public debate have been given priority here: greenhouse gas (GHG) emissions and income inequality.

These first augmented accounts bring together statistics in these areas that are made available in a single webpage, within the national accounts website on insee.fr. On the one hand, they include GHG emissions accounts, including the greenhouse gas emissions assessment and a revised carbon footprint measure. They also include accounts by household category, showing the distribution of income, consumption and savings: these make it possible to draw up a redistribution balance sheet including all transfers and public services, and to measure the distribution of consumption and savings according to income, age or socio-professional category, for example. Three publications present the main results. They are accompanied, on the model of the national accounts, by a set of detailed tables. These new sources will be updated each year in a similar format, to ensure their continued use. Comprehensive methodological notes explain how these accounts are constructed.

On an exploratory basis, the enhanced accounts also propose new summary indicators that cross-reference some of these dimensions. A study on economic indicators adjusted for GHG emissions has just been published. Another study will soon follow, proposing indicators of so-called “balanced” income growth, i.e. one that gives equal weight to each individual regardless of their income/contribution to wealth production

What exactly do these new, enhanced national accounts allow us to do? And what can we learn from the first synthetic indicators designed to complement GDP?

Household distributional accounts continue a line of work pioneered by INSEE some fifteen years ago. The aim is to measure how overall income is distributed between various household categories (standard of living group, age bracket, diploma, gender, family configuration, socio-professional category and urban unit bracket).

To understand this, it’s important to bear in mind that there are two income aggregates in the national accounts that are broken down in this way.

On the one hand, household disposable income alone: this is the most common concept, but also the narrowest. Its decomposition by household category, implemented very early at INSEE (first prototype in 2008, one-off study in 2017), is in the process of being generalized internationally. The breakdown of the household account proposed today is not limited to income: it also includes consumption and savings.

On the other hand, total national income: this broader approach [Accardo et al., 2021], also highlighted in academic work [Piketty et al., 2018], reallocates income from other institutional sectors (business and government) to households. It describes the distribution of national income in two ways: “extended primary income”, which is the income that households would receive before any redistribution mechanism; and “extended standard of living”, after taking into account all levies, monetary social benefits and the valuation of public services (non-monetary transfers). This second approach makes it possible to examine all redistribution, referred to as “extended redistribution”, and to take stock of it. Thus, in 2022, 57% of people have an extended standard of living higher than their extended primary income, and are therefore beneficiaries of extended redistribution. After transfers, the extended standard of living of the wealthiest 10% of households is 4 times higher than that of the poorest 10%, while their extended primary income is 24 times higher before transfers (figure 1). Thus, by 2022, extended redistribution will divide the income ratio between the wealthiest 10% and the poorest 10% by 6. These results have remained stable over recent years.

The production of accounts by category is now standardized and will be published annually. The detailed tables made available cover the years 2018 to 2022.

Today’s publication on France’s greenhouse gas emissions and carbon footprint in 2023 presents both resident emissions, i.e. those resulting from productive economic activity on French territory, and an updated measure of France’s GHG footprint, reflecting our consumption and investments (figure 2).

The ability to express emissions and footprint in national accounting nomenclatures highlights the decline since 2010 in the GHG intensity per euro not only of GDP, but also of final demand, exports and imports: in other words, one euro of each of these major economic aggregates emits less GHG today than in 2010.

While GHG emissions have fallen sharply since 1990, by 31%, this decline is less marked for the carbon footprint, which has fallen by “only” 13%. However, despite being 5 times more GHG-intensive per euro than domestic production, imports are decarbonizing at the same rate as GDP.

The attached tables present, for the years 1990 to 2023, the various breakdowns of the air emissions accounts and carbon footprint: by type of greenhouse gas, by geographic origin and activity of emissions, by products and institutional sectors of final demand, as well as international comparisons. They are available on the websites of Insee and the Service de la donnée et des études statistiques (SDES, the statistical service of the French Ministry for Ecological Transition and Territorial Cohesion), which co-produces them with Insee.

On the basis of these detailed results, INSEE submits for discussion some exploratory synthetic indicators, which can complement those of the national accounts in the overall assessment of economic, social and environmental performance. These indicators require conceptual work and additional assumptions. A good indicator must have a clear interpretation and be capable of sending a signal distinct from conventional indicators such as GDP or net savings.

They are intended to be presented in two more analytical publications: the first, “Can the climate be taken into account in national accounts”, is being published today, while the second, on income trends by giving equal weight to each household, will be published in the coming weeks.

One of the limitations of GDP is that it does not take into account the fact that current economic activities, whose value it measures, affect, via the accompanying GHG emissions, the quality of the heritage passed on to future generations. In other words, because of the emissions induced by economic activities, net value creation (net domestic product) is lower than ordinarily measured, and the portion saved is also lower.

Insee is therefore proposing an “adjusted” domestic product indicator and national savings indicator, i.e., net of the costs implicit in current greenhouse gas emissions (Figure 3). We also propose a “GHG counter”, measuring cumulative deviations from the projected emissions reduction trajectory, an assessment of the future cost of decarbonization, and an order of magnitude of the costs of damage already incurred.

For France, the adjusted net domestic product (ANDP) is estimated to be 4.3% lower than the usual net domestic product (NDP) in 2023. As long as domestic GHG emissions remain positive, this ANDP will remain lower than the NDP. However, the decline in French GHG emissions in recent years means that this downward correction is diminishing: this decoupling implies that the measure of growth in volume of the ANDP is higher than that of the NDP.

The adjusted net savings indicator, on the other hand, leads us to revise our assessment of the economy’s sustainability. Adjusted net savings appear to be persistently negative, reflecting a lack of sustainability in economic activity. Finally, an assessment of the future cost of the complete decarbonization of the economy (“implicit climate debt”) can be calculated.

Analysis of the consequences of GHG emissions also makes it possible to consider their effects “beyond GDP”, notably on household health and mortality. This leads us to expand the scope of national accounting to include this type of effect, and thus to integrate them into the proposed indicators, which are then considered “expanded”. Of course, in the debate surrounding this type of indicator, it may seem incongruous to give a monetary equivalent to the essentially non-monetary dimensions of the threats to health and living conditions caused by global warming. But it is a necessary step if we are to construct a synthetic indicator.

Household distributional accounts over several years make it possible to examine differentiated trends in the distribution of national income, for example between the most modest and the most affluent.

Insee will be proposing the construction of a new indicator known as “balanced growth”, presenting the average of income trends by standard of living. It differs from the usual growth measured by the rate of change in GDP in that the latter gives weight to changes in household income in proportion to their initial income: in this usual indicator of growth, a household with twice as much initial income as another will see its income change by twice as much. It is in this sense that growth is described as “income-weighted”. In contrast, the “balanced growth” indicator gives equal weight to all household categories, whatever their income. Such an indicator thus corresponds more closely to the “experience” of households when they examine their own income trends (for a conceptual elaboration, cf. Germain, 2020 and Blanchet et al., 2024).

These experimental synthetic indicators do not have the same enduring status as standard macroeconomic indicators as produced by standard national accounts: a blog post published in 2023 explained how GDP, and above all the architecture of the System of National Accounts that underpins it, remain relevant for analyzing a large number of economic issues, such as the evolution of the division of value added between wages and profits, or that of public finances, for example. GDP and national accounts enable comparisons, notably between countries and between time periods, and provide regular and rapid information useful for economic policy decisions.

What’s more, the calculation of these new indicators relies on conventions (choice of weights for balanced growth) or key parameters whose value is uncertain and could be subject to major revision (social cost of carbon and shadow price of carbon, for example).

These indicators are complementary to conventional macroeconomic indicators, as they illustrate how the reference framework of national accounts can be extended to provide a broader assessment of economic activity. They are in line with international developments in the system of national accounts, to help assess the well-being and sustainability of our economic model. The new system, which is in the process of being adopted, places the emphasis on distributional household accounts and on net macroeconomic aggregates. The construction of such indicators, and more broadly issues “beyond GDP”, were discussed at length at the recent Conference of European Statistics Stakeholders (CESS) in Paris, co-organized by Insee and the Banque de France in October. This conference provided an opportunity to present the various initiatives taken by European statistical institutes and their partners to enrich economic indicators and obtain a broader vision of sustainability and well-being.

The dimensions selected for this first stage of the augmented national accounts program led by INSEE, namely the distribution of growth between households and greenhouse gas emissions, were chosen because of their importance in current public issues. There are, however, many other relevant dimensions in which the accounts could be augmented; for example, and without seeking to be exhaustive, taking account of the environment beyond the sole question of greenhouse gases and global warming (valuing natural resources and biodiversity), or integrating domestic activities and leisure time (e.g. Heys, 2023 or Benczur et al., 2024).

• André M., Buresi G., 2024, « Les ménages les plus aisés épargnent un quart de leur revenu, les plus modestes n’épargnent pas », Insee-Focus n° 338, novembre
• André M., Buresi G., Martin H., 2024, « Transferts monétaires et services publics augmentent de 16 % le niveau de vie au milieu de l’échelle », Insee-Première n° 2022, novembre
• André M., Germain J.-M., Sicsic M., 2023, « Comptes nationaux distribués : une nouvelle manière de distribuer la croissance − Une expérience innovante au service du débat public », Courrier des statistiques n° 9, Insee, juin
• Baude M., Larrieu S., 2024, « Les émissions de gaz à effet de serre et l’empreinte carbone de la France diminuent significativement », Insee-Première n° 2023, novembre
• Benczur P., Boskovic A., Cariboni J., Chevallier R., Le Blanc J., Sandor A.-M., Zec S., 2024, « Sustainable and Inclusive Wellbeing, the road forward« , Publications Office of the European Union doi:10.2760/828060, JRC137910, juillet
• Blanchet D., Fleurbaey M., Pesme C., 2024, « Au-delà de la moyenne : croissance et répartition de la croissance », Chapitre III du rapport d’étape de la chaire « Mesures de l’économie », axe « Autour et au-delà du PIB »
• Germain J.-M., 2020, « Du PIB au PIB ressenti : en retrait sur le PIB, l’Europe dépasse désormais les États-Unis en bien-être monétaire », Insee analyses n° 57, octobre
• Heys R., 2023, “Inclusive income: how the ONS is moving beyond GDP”, blog ONS, juin
• Larrieu S., Roux S., 2024, « L’épargne nette ajustée des effets liés au climat est négative en France », Insee-Analyses n° 98, novembre

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