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Income, consumption, and prices Income, consumption, and prices 1. Developments within income and consumption The distribution of income is an important indication of any imbalances in a society, and is vital to the opportunities for consumption available to various groups of the population. In 1998, the average personal income for persons aged 15 and above was DKK 189,000. Men had larger incomes than women, as the average income of men was DKK 224,900, while the average income of women was DKK 154,500. However, since 1984, women's incomes have increased at higher rates than men's: whereas men's incomes have increased by 68 per cent, women's incomes have increased by 97 per cent. Figure 1 Average personal income, by age group DKK thousands 300 250 200 1984 1998 150 100 50 0 1515---1818 2020- --2323 2525- --2828 3030- --3333 3535- --3838 4040- --4343 4545- --4848 5050- --5353 5555- --5858 6060- --6363 6565- --6868 7070- --7373 + 74 When considering personal incomes as they relate to socio-economic status, we see that only 4.5 per cent of all top-level managers (salaried employees at upper levels) made less than DKK 200,000 in 1998. When considering the other end of the scale, 93.1 per cent of all pensioners, 93.9 per cent of all unemployed people, and 99.8 per cent of all students had incomes of less than DKK 200,000. Income, consumption, and prices Figure 2 Personal income, by socio-economic status 1998 Others not economicalley active Pensioneers, etc. DKK 300 000 + Receiving education DKK 200 000 - 299 999 Unemployed DKK 100 000 - 199 999 Other employees < DKK 100 000 Employees, basic level Employees, medium level Employees, higher level Top managers Self-employed & ass. Spouses 001010 20 30 40 50 60 70 80 90 100 Per cent Family income When considering families, couples with children had the highest average income after taxes in 1997; their annual average was DKK 277,000. The corresponding figure for couples without children was DKK 230,400. When carrying out such comparisons, it should be noted that couples without children are normally older than couples with children, and that children may contribute to total family incomes to some extent. For couples with children and couples without children, incomes went up from 1990 to 1997 by 34.3 per cent and 36.8 per cent, respectively. Figure 3 Average family income after taxes DKK thousands 300 250 200 150 100 1990 1998 100 50 0 Couples Couples Single Single Single Single Adults without with men men women women living children children without with without with with their children children children children parents For single persons with children, the average 1997 family income was DKK 150,600 while the corresponding figure for singles without children was DKK 112,500. The latter group is largely made up of students and pensioners. The increases in income for these groups from 1990 to 1998 were 31,0 per cent and 33,0 per cent Income, consumption, and prices 2. How is income spent? The household budget survey carried out by Statistics Denmark, which involves a study of private-household finances, makes it possible to see how total household income is spent. The main part is spent on consumption According to the somewhat wider concept of income in the consumption survey, an average 1997 household has a total income of DKK 372,916. This figure does not include an additional DKK 1,372 from net payments from capital-pension schemes. A large part of this income was not, however, at the disposal of the household due to income tax, etc., and any interest payable on household debts (including mortgages). The amount left to average households was DKK 229,140. The main part of this amount was spent on consumption - DKK 208,982 - while DKK 14,477 was used for savings (including pension savings and savings tied up in real property). The remaining DKK 5,681 was spent on membership fees, gifts, and charity. Employee households pay more in income taxes Figure 4 shows how in 1997, employee households constituted the group where income taxes, etc., accounted for the largest percentage of the total income. Pensioner households and other households made up of persons who were not economically active (social-security recipients, students, etc.) were characterised by spending a considerably greater percentage of their income on consumption, while their savings were much smaller; indeed, the group of Other persons not economically active had negative savings. On average, households of people which were not economically active took out debt or lived by "dipping into" their savings. Figure 4 Income expenditure, by household 1997 Other persons not economically active Gifts, charity, etc. Pensioners, etc. Savings Consumption Employees Interest payments, etc. Self employed Income taxes, etc. -20 -10 0010 10 20 30 40 50 60 70 80 When assessing these differences, it should, of course, be noted that households vary greatly in nature. Households where the main breadwinner was self-employed or an employee were significantly larger than other households; this type of household was home to 2.5 persons per household on Income, consumption, and prices average, whereas the corresponding figure for pensioners' households was 1.4 and for other households 1.9 persons per household. Total income was significantly lower in households which were not economically active: the average income for pensioners' households was DKK 208.324, while the average income for households of other persons not economically active was DKK 195.320. Households where the main breadwinner was self-employed had an average total income of DKK 518.158, while the average income of employee households was DKK 471.652. In this context, it is important to remember that both of these groups of households are quite inhomogeneous. Self- employed people include owners of large enterprises as well as small, independent greengrocers, just as the employee group covers everyone from top managers to check-out clerks, etc. The most money was spent on housing Figure 5 illustrates how housing constituted the largest single consumption item, as actual housing consumption accounted for 21 per cent of total consumption in 1997, i.e. rent in rented accommodation and calculated rent in owner-occupied housing, plus maintenance, etc. This figure does not include an additional 7 per cent for heating and electricity. Food, beverages, and tobacco accounted for 17 per cent, which corresponds to the amount spent on transport, etc. The fifth-largest expense item was Other goods and services, which includes expenditure on education and child-care, restaurants and hotels, various services, insurance, etc. Recreational equipment and entertainment accounted for 11 per cent, while clothing and footwear only accounted for 5 per cent Figure 5 Consumption by goods/services Food, beverage, and tobacco 18 per cent Clothing and footwear 6 per cent Housing 22 per cent Fuels and electricity 6 percent Furniture, etc. 6 percent Transport, etc. 17 per cent Medical products and services 2 per cent Recreational equipment, entertainment etc. 11 per cent Other goods and services 12 per cent Income, consumption, and prices Income is also spent on alcohol, tobacco, and computers In 1999, the average alcohol consumption per citizen was 9.5 litres of pure alcohol, which is the same amount as in 1998. Consumption of alcoholic beverages has varied somewhat during recent years. In 1999, consumption levels were very low; this was mainly caused by a reduction in beer consumption. Wine consumption has increased throughout the entire period from 1955, except for a slight decline from 1997 to 1998. Spirits consumption reached a peak in 1976 and has declined gradually since then, until reaching a relatively stable level during the 1990s. Figure 6 Total consumption of dutiable alcohol 1955-1999 Thousand litres, 100 % proof. 60 000 50 000 Spirits 40 000 Wine 30 000 Beer 20 000 10 000 0 1955 1960 1965 1970 1975 1980 1985 1990 1995 Tobacco consumption Cigarette consumption decreased during the 1980s and reached a stable level during the first half of the 1990s. During the second half of the 1990s, this trend has changed to a slight increase in cigarette consumption. Pipe-tobacco consumption has fallen at a largely steady rate since 1990, whereas consumption of cigars and cigarillos has fallen for a long period of time. It would appear that tobacco consumption has stabilised in recent years at a slightly lower level than in the mid-1980s. Figure 7 Tobacco consumption 1985-1999 Mio. Tonnes 8 000 4 000 6 000 3 000 4 000 2 000 2 000 1 000 0 0 85 87 89 91 93 95 97 99 85 87 89 91 93 95 97 99 Cigarettes Cigars and cigarillos Pipe tobacco Income, consumption, and prices Computers and mobile phones Throughout the 1990s, computers and mobile phones have steadily made their way into Danish households. In 1999, 60.1 per cent of all Danish households had a personal computer, and 32.8 per cent had Internet access. Also, 58.8 per cent of all households had a mobile phone. Figure 8 Households possessing personal computers and mobile phones Per cent 70 60 Personal computer 50 40 Mobile phone 30 20 Internet acces 10 0 1990 1991 1992 1993 1994 1995 1996 1997 1998 1999 3. Household transfers to and from the public sector The value of indirect subsidies The household budget survey also calculates the value of the indirect public subsidies which households may be said to receive insofar as they utilise free or cost-reduced services within healthcare, education, and childcare. On the other hand, part of all household consumption actually constitutes payments to the public sector insofar as such consumption is liable to VAT or other taxes/duties.

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