Imputation
The imputations place a market value on certain transactions that do not occur in the market economy or that are not observable in its records. They are included in personal income and in other NIPA aggregates in most cases to keep the NIPA aggregates invariant to how certain activities are carried out.
Imputations are added to personal income and to other measures in the national income and product accounts (NIPAs) so that a comprehensive account of total production and its distribution can be presented. The imputed transactions included in the NIPAs are a limited set of exceptions to the principle that the NIPAs reflect market transactions in goods and services. In order to keep the NIPA measures invariant to how certain activities are carried out, imputations are made to place a market value on certain transactions that do not occur or are not observable in the market economy. In addition, some market transactions are reconstructed to provide a representation of the activity that is more appropriate for the NIPAs. Both a measure of the production and the incomes associated with that production are imputed. The imputations described here are those that affect personal income.
Specifically, six imputations are included in the estimates of personal income: Imputed pay-in-kind, employer-paid health and life insurance premiums, the net rental value of owner-occupied farms and the value of food and fuel produced and consumed on farms, the net rental value of owner-occupied nonfarm housing, the net margins on owner-built housing, and the imputed interest paid by financial intermediaries except life insurance carriers. These imputations accounted for about 8 percent of personal income at the national level in 1999.
Imputed pay-in--kind is added to the estimates of wages and salaries so that all the earnings of employees who receive part of their wages in pay-in-kind will be included in personal income. This imputation is an estimate of the value of the food, lodging, clothing, and other goods and services that are received by employees from their employers as full payment or as partial payment for their services.
The net rental value of owner-occupied farm housing and the value of food and fuel produced and consumed on farms are included in farm proprietors' income so that that measure reflects the income from all of the production of noncorporate farms.
The net rental value of owner-occupied nonfarm housing is included in the rental income of persons. The imputation assumes that the owner-occupants are in the rental business and that they are renting the houses in which they live to themselves: As tenants, they pay rent to the landlords (that is, to themselves); as landlords, they collect rent from their tenants (that is, from themselves), they incur expenses, and they may have a profit or a loss from the rental business.
The net margins on owner-built housing is included in proprietors' income, classified in the construction industry. It is the imputed net income of individuals from the management of the construction or renovation of their own dwellings and is included in the measure of the output of structures.
The imputed interest income paid by financial intermediaries except life insurance carriers, which is included in personal interest income, is received by persons from depository institutions, that is, from commercial banks, mutual savings banks, savings and loan associations, credit unions, and regulated investment companies. It is an estimate of the value of the services (such as checking and record keeping) that these institutions provide to persons without an explicit charge.
Another portion of personal interest income is classified as imputed interest. This is an estimate of the investment income that is earned on the financial reserves of life insurance carriers. This investment income is attributed to the policyholders in order to include it in personal saving, and not in business saving, and when the income is earned, rather than when it is distributed.
