Survey of consumer expenditure

Total consumption expenditure

Consumer expenditure is the average annual consumption in NOK for a household, according to COICOP (Standard for classification of individual consumption by purpose. See detailed description under “Standard classifications”). Consumer expenditure does not include expenses for direct taxes, social security premiums, real investments, and contractual savings. The share of consumer expenditure indicates the share of total consumption for a specific commodity group or service. Thus, the total consumption constitutes 100 percent.

Household is the unit in the household budget survey. A household includes all persons who are permanently resident at the same address and who have a common food budget.

Income after tax is the total income where fixed tax and negative transfers (pension premiums in employment and paid child support within the public scheme) are deducted.

Income information is obtained from the register, with status from one year before the statistical year. We group the respondents by income group (quartiles):

• First quartile: lowest 25 percent of the income distribution

• Second quartile: next lowest 25 percent of the income distribution

• Third quartile: next highest 25 percent of the income distribution

• Fourth quartile: highest 25 percent of the income distribution

Income per consumption unit / equivalent income To be able to compare the after-tax income level between different households (as an approximation to compare living standards), it is common that in addition to household income, the number of people in the household is also taken into account. This is done by dividing the total household income after tax by the number of consumption weights or consumption units in the household. The number of consumption units is calculated using so-called equivalence scales. The consumption units take into account that households with many people need higher income than households with few people to have a corresponding standard of living, and that households with many people will have economies of scale when it comes to several goods (e.g., TV, washing machine, newspaper, broadband connection, electricity expenses, etc.). There are several types of equivalence scales used in different contexts. In income and wealth statistics, the so-called EU scale (see below) is mainly used.

Consumption units calculated according to the EU scale assign the first adult in the household a weight=1, then the next adults a weight=0.5 and children under 17 years a weight=0.3. According to this equivalence scale, for example, a household of two adults and two children must have a household income that is 2.1 times as high as a single person to have the same economic welfare.

The low-income EU scale The annual low-income threshold is set to 50 or 60 per cent of the median after-tax income per consumption unit. When calculating persistent low-income over a three year-period, the low-income threshold is set to 50 or 60 per cent of the average median during the same time period. When calculating persistent low-income over a four year-period, persons with income below the annual low-income threshold the current year, and below the low-income threshold in at least two of the previous three years, are regarded as having persistent low income. After-tax income per consumption unit equals total household taxable and non-taxable income, minus taxes, divided on the number of consumption units in the household. The number of consumption units is calculated by using the 'modified' OECD scale or the EU scale, where the first adult is given a value of 1, any additional adult is given the value of 0.5, and each child is given a value of 0.3. The number of consumption units in a household consisting of two adults and two children is thus 2.1, according to this method

Centrality is an index that distributes municipalities based on proximity to workplaces and service functions, without using urban areas in the classification. The centrality distribution follows the standard for centrality, which categorizes all municipalities from 1 (most central) to 6 (least central). A complete list of which municipalities belong to which centrality category can be found in the list under ‘standard classifications

Classification of Individual Consumption According to Purpose (COICOP) 2018

Classification of households

Standard for centrality