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THE VALUATION OF NONMARKET ACTIVITIES IN INCOME ACCOUNTING
Author(s) -
Peskin Henry M.,
Peskin Janice
Publication year - 1978
Publication title -
review of income and wealth
Language(s) - English
Resource type - Journals
SCImago Journal Rank - 1.024
H-Index - 57
eISSN - 1475-4991
pISSN - 0034-6586
DOI - 10.1111/j.1475-4991.1978.tb00032.x
Subject(s) - valuation (finance) , nonmarket forces , economics , national accounts , unit (ring theory) , order (exchange) , accounting , accounting information system , national income and product accounts , position (finance) , public economics , business , microeconomics , finance , mathematics education , mathematics , factor market
Expanding a conventional national accounting framework in order to include activities that are not produced or consumed via ordinary markets requires the accountant to adopt some procedure for assigning unit values to these activities. Often, as is the case with governmental services, unit values are equated with unit costs of production. This paper argues that the appropriate valuation generally differs depending on whether the activity is viewed from the perspective of the producer, the consumer, or society. The theoretical justification for this position is developed first for the case of nonmarketed environmental services and then for in‐kind governmental transfers. Rather than choosing a single unit value, the paper argues for and outlines an accounting system that will permit the simultaneous adoption of more than one valuation. Techniques for implementing the system for the environment and for in‐kind transfers are discussed. Finally, drawing on the experience of the authors, the paper argues for the importance of developing data sets with more than one valuation. The authors claim that the effort to implement the system has generated valuable ancillary data sets even though data limitations and unresolved methodological questions have precluded complete implementation.