TABLE S.1 Examples of More Careful Price Measurement for Services Subsector
Least preferred Example of more firm- Example of adjustment price deflator specific price deflator for quality
Restaurant
PPI or CPI
Price of a meal
Incorporating the quality of the meal
Hotel
PPI or CPI
Price of a room
Incorporating the comfort and amenities of the room
Management consultancy PPI or CPI
Hourly fee of consultant
Incorporating contractspecific terms
Advertising
Price of a printed ad or of 1 minute of television advertising
Accounting for the number of viewers seeing the advertisement
PPI or CPI
Source: Elaboration from Eurostat 2016. Note: CPI = consumer price index; PPI = producer price index.
health services). These services, by definition, do not carry a market price and are usually excluded from firm-level analyses. Financial services. A second group comprises financial services, whose sales or output can be difficult to define. Customer fees alone do not capture a bank’s full income from borrowers or account holders, especially given that many financial service providers charge low fees or none at all. To get around this issue, national accounts statistics attempt to measure output by looking at spreads between interest rates that banks face (measured by reference rates) and that banks provide to deposit account holders or charge to their borrowers.4 Constructing such measures gets especially complicated with more-complex financial products involving different currencies or risk profiles. Because of the complications around measurement, financial sector firms are usually excluded from firm-level data analysis or treated separately. Services delivered for free. Radio, television, and digital services that are delivered for free pose additional challenges for measuring output. Advertising revenue could provide some indication of value, but this value does not always reflect the full value that consumers obtain from these services. This underestimation of the value of free services is particularly relevant for many digital services, as discussed more extensively later in this Spotlight.
Measuring Inputs Quantifying inputs such as labor, capital, and other intermediate goods and services can similarly be more challenging for services than for manufacturing. Labor. First, the quality of labor is hard to measure. As chapter 1 highlighted, services subsectors vary greatly in their use of skilled labor. Even though productivity measures rarely adjust for the skill content of labor, a differentiation between unskilled and skilled labor can be useful to better understand variations in productivity across sectors. 114
At Your Service? The Promise of Services-Led Development
