Frequently Asked Questions

Guidelines for Citing BEA Information | ID: 488 | Created: Apr-23-2008

Why does GDP include imputations?

Gross domestic product (GDP) is a comprehensive measure of the nation’s production.  In order to be comprehensive, it must include some goods and services that are not traded in the market place.  Those components of the GDP are called imputations.  Examples include the services of owner-occupied housing, financial services provided without charge, and the treatment of employer-provided health insurance.

Imputations approximate the price and quantity that would be obtained for a good or service if it was traded in the market place.  The largest imputation in the GDP accounts is that made to approximate the value of the services provided by owner-occupied housing.  That imputation is made so that the treatment of owner-occupied housing in the GDP is comparable to that of tenant-occupied housing, which is valued by rent paid.  That practice keeps GDP invariant as to whether a house is owner-occupied or rented.  In the GDP, the purchase of a new house is treated as an investment; the ownership of the home is treated as a productive activity; and a service is assumed to flow from the house to the occupant over the economic life of the house.  For the homeowner, the value of that service is measured as the income the homeowner could have received if the house had been rented to a tenant.

Another important imputation measures financial services provided by banks and other financial institutions either without charge or for a small fee that does not reflect the entire value of the service.  Examples are checking-account maintenance and services provided to borrowers.  For the depositor, this “imputed interest” is measured as the difference between the interest paid by the bank and the interest that the depositor could have earned by investing in “safe” government securities. For the borrower, it is measured as the difference between the interest charged by the bank and the interest the bank could have earned by investing in those government securities.

In addition to imputations for nonmarket transactions, the GDP accounts redirect certain transactions so that the consumption is attributed to the ultimate recipient of the good or service rather than to the payer.  An important example is health care, which is generally paid for by private health insurance (often provided by the employer), by government insurance plans such as Medicare and Medicaid, or by consumer out-of-pocket payments for deductibles, copayments, and uninsured expenses.  In the GDP, these health-care transactions are redirected so that they are included in personal consumption expenditures, reflecting the role of households as the final consumers of those health goods and services.

Since the mid-1990s, the shares of GDP accounted for by some imputations have increased as the activities measured have grown faster than other activities.

  • From 1996 to 2006, the share of GDP accounted for by the imputation for owner-occupied housing increased from 6.0 percent to 6.2 percent.
  • From 1996 to 2006, the share of employer contributions for private health and life insurance grew from 3.2 percent of GDP to 4.2 percent of GDP.
  • From 1996 to 2006, the share of all imputations in GDP grew from 13.8 percent to 14.8 percent.
  • In 2006, imputed financial services represented 1.7 percent of GDP, the same as in 1996.

Without imputations, the GDP story is incomplete and can be misleading.  For example, from 1998 to 2006, personal consumption expenditures for medical-care services, which are largely funded by government or employer-provided health insurance, grew from 10.5 percent to 12.0 percent of GDP, while the share of people engaged in production in the private health care and social assistance industry (that is, full-time equivalent employment plus the number of self-employed) grew from 9.4 percent to 10.8 percent of total employment.  If there had been no imputations or redirections showing the growth coming from government and employment-provided health insurance, the growth in GDP for health services would not have been correctly aligned with the growth in employment.

For a detailed accounting of GDP imputations, see Table 7.12.

Ask us a question...

"Why does GDP include imputations? "
Your email address
Your question
What is 3 + 8? (Spam protection)

Double check that email address! | We won't be able to contact you if it is incorrect.

Why the math question? | This helps stop malicious programs from using this site to generate SPAM email.

Please allow us some time | It could take up to two(2) business days for our Subject Matter Experts to follow up with an appropriate answer to your question(s). Your patience is very much appreciated.

Need Help?

Using the FAQ database | All FAQs are displayed when first visiting the page. They are ordered by most recent or recently updated and can be filtered by keyword search term, by category, and by manually selecting the page number buttons. To view any FAQ, click on the title to open the answer. Submitting a question is done by selecting the “Ask a question” tab along the top of the FAQ.

Selecting an FAQ | Clicking on the title of the FAQ will bring up the answer to the FAQ. Navigating back to the list of FAQs is done by selecting the tab “Latest FAQs”. A tab to ask a question specifically about this FAQ can be found at the top of the answer. Also, the FAQ id and date this FAQ was created or last modified is shown in the upper right hand corner.

Searching the FAQs | Enter a keyword search term and click the Search button to narrow FAQ selections. To return to all FAQs, click the Clear button or clear the keyword search field and click the Search button.

Filtering FAQs by category | Chose the category to filter by and click Apply button. This will display only the FAQs related to an assigned category. To return to all FAQs click the Clear button next to the search by keyword field or select ALL from the drop down menu and click Apply button.