Methodology for Estimating Annual TSA Accounts

The Transportation Satellite Accounts (TSAs) currently are produced using input-output (IO) data from the Bureau of Economic Analysis (BEA) for benchmark years. Benchmark data are estimated every five years and released about five years after estimation endpoint. This means that the benchmark data are at least five years old at the time of release. Because there is interest in a more up-to-date picture of the economy, BEA produces annual IO data.  The annual IO data, like the benchmark IO data, provides a means for measuring the contribution o f transportation to the economy. This contribution, however, is an underestimate as it includes only that of for-hire transportation. The TSAs provide a more complete measure by counting the role of transportation produced by non-transportation industries for their use (termed as in-house transportation). Because the TSAs are based on the benchmark IO accounts, the TSAs provide a dated picture. A more current depiction requires the use of the annual IO data. The following describes the method for producing TSAs using the annual IO data.

Annual IO Data

The annual input-output (I-O) accounts provide a time series of detailed, consistent information on the flow of goods and services that make up the production processes of industries.1

The annual IO accounts provide the same type of information as the benchmark IO accounts do; however, the annual accounts do not provide as much detail. For this reason, TSAs cannot be produced using annual IO data per the method currently used to produce TSAs from benchmark data. The following summarizes the difficulties brought about by the lack of detail in the annual IO accounts.

  1. The benchmark data provided to the Bureau of Transportation Statistics (BTS) for use in producing the TSAs includes a detailed list of items that make up each commodity included in the accounts and the value of each. Item values are used in making an estimate of in-house transportation.
  2. The benchmark data shows the commodities used by for-hire transportation industries to produce transportation services. The annual data likewise shows the commodities used but does not provide as much detail. The detail is needed to estimate the value of in-house transportation, which is assumed to be the total value of items relevant to transportation (e.g., aviation gasoline) less the value of those same items used by for-hire transportation. The value of the items used by for-hire transportation is proxied by the value of the commodities that make up the selected items. In the benchmark data, the selected items account for a large portion of the value of the commodity to which they belong. In the annual data, the selected items do not because the commodities to which they belong are combined with other commodities. Using these commodities as proxies results in a larger value being subtracted from the total value of transportation related inputs and hence in an underestimate of in-house transportation.
  3. Benchmark data (both the data provided to BTS and the data made available to the public on the BEA website) includes an estimate of the transportation costs and wholesale and retail trade margins for each commodity by industry. These estimates are required to accurately estimate the price paid by an industry for each commodity used to produce in-house transportation. The inputs to in-house transportation are estimated from the IO use table, which displays inputs to an industry at producers’ prices. Producers’ prices do not include the cost of transporting goods to the industry and any trade margins required to acquire the inputs.
  4. The annual accounts do not contain the detail that the IO accounts have about personal consumption expenditures. The National Income Product Account Tables provide detailed information on personal consumption expenditures, but as a total, rather than by commodity as in the IO benchmark accounts. This lack of detail prevents a detailed list of inputs from being developed for household production of transportation services. Only the total of intermediate inputs and total output can be estimated with the NIPA tables for non-benchmark years.

Methodology

The annual IO data do not contain the detail required to develop TSAs per the method used to produce TSAs from benchmark data. The detail from the benchmark data is required to create annual TSAs. The following describes how the required detail is estimated.

  1. Estimating the total value of in-house transportation:  The value of in-house transportation is estimated in the benchmark TSAs as the total value of items related to transportation (e.g., aviation gasoline) less the value of those same items used by for-hire transportation. Multiple items fall under each commodity listed in the I-O accounts. A value for each item was provided to BTS for the benchmark I-O data; only the sum of the value of the items could be obtained for the annual I-O data as a commodity value. Table A1 shows this relationship.

Table A1. Relationship between Items and Commodities in the I-O Accounts

Items Commodity
Aviation gasoline Petroleum refining and manufacturing
Jet fuel
Motor vehicle gasoline
Light fuel oil

NOTE: This is an example and not a complete list of all items belonging to the petroleum refining and manufacturing industry in the I-O accounts.

SOURCE: U.S. Department of Transportation, Bureau of Transportation Statistics, 2014

The value of individual items is needed to create the TSAs. Since the values are not available in the annual accounts, the values are estimated using the value of the commodities that make up the selected items. The following is assumed in making these estimates:

  1. Constant commodity share: Commodities in the benchmark accounts make up the same share of the total value of the commodities to which they are assigned in the annual accounts in both datasets. This makes it possible to estimate the value of the commodity used by for-hire transportation to produce transportation services in the annual accounts. The annual accounts otherwise do not provide a measure as the value is combined with that of other commodities. As an example, assume that petroleum is the commodity for which a value is needed and is available in the benchmark data but not available in the annual accounts. Suppose petroleum is combined with the commodities A2 and A3 in the annual accounts. Suppose that the value of petroleum makes up 60% of the combined value of petroleum, A2, and A3 used by for-hire transportation in the benchmark year. Then, the value of petroleum in an annual year is 60% of the total combined value of petroleum, A2, and A3 used by for-hire transportation. This percentage is the commodity share.
  2. Constant item share: Items make up the same share of the total value of the commodity to which they belong in both datasets. This means that if aviation gasoline comprises 10% of the total value of petroleum in the benchmark year, aviation gasoline comprises 10% of the total value of petroleum (as estimated in (a)) in the annual year. This percentage is the item share.

In short, the value of in-house transportation can be estimated using annual IO data per the following formula:
Value of in-house transportation annual year = value of commodity in annual account * commodity share * item share

  1. Distributing the value of in-house transportation: Per the current methodology, the in-house value of transportation is distributed to industries through distributional weights. The weights assign a larger share of in-house transportation to industries that employ a larger number of transportation workers. The industries to which values are distributed are those in the benchmark accounts.
  2. Estimating the value of inputs for the production of in-house transportation: Transportation activities require inputs not unique or primary to transportation. For example, office supplies and accounting services are shared by transportation and all other production activities. The TSAs estimate the value of these inputs by assuming non-transportation industries use these non-transportation related inputs in the same proportion as for-hire industries. The lack of detail in the annual accounts results in an overestimate of the value of non-transportation related inputs. It therefore is assumed that the proportional requirement is the same in annual years as in the benchmark year.
  3. Calculating transportation costs and trade margins: Transportation costs and trade margins are applied to the estimate of in-house transportation for each industry. They are the markup on the commodity when delivered to its final use and are part of the total price paid by consumers. Because transportation costs and trade margins are not available in the annual accounts, it is assumed to be the same share of the total value of a commodity in annual years as in the benchmark year.
  4. Calculating household production of transportation services: The method for calculating household production of transportation services is similar to that used to produce the benchmark TSAs. The only difference is that in the annual TSAs, the National Income Product Accounts (NIPA) table of consumer expenditures is used to find the value of user and operating inputs for the production of household transportation services. The annual I-O accounts themselves do not contain a detailed list of consumer expenditures. This lack of detail prevents a detailed list of inputs from being developed for household production of transportation services. Only the total of intermediate inputs and total output can be estimated with the NIPA tables. This means that the value of each intermediate input is not shown in the annual TSA use table as it is for for-hire transportation and in-house transportation related to business activities; only the total is shown.

The above method was used to create TSAs from the 2003 through 2006 annual IO accounts. Further details on each step can be found in the methodology for creating TSAs from benchmark IO data can be found at this page. The above simply is an outline of the additional steps taken to produce TSAs from the annual accounts. The resultant values seem reasonable and maintain the integrity of the IO accounts themselves.

1http://www.bea.gov/industry/iedguide.htm#IO