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The 'F Words': Why Surveying Businesses About Intangibles is so Hard

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  • Josh Martin
  • Cain Baybutt

Abstract

The role of intangible assets in creating value in the modern economy is increasingly recognised, but measurement of their value and contribution are still in their infancy. This reflects a number of measurement challenges, which we characterise as 'the four F words'. First, data on intangibles are often not retained by businesses, as business accounting poses high hurdles for these assets to be recorded, and they usually cannot be used as debt collateral. As a result, businesses rarely have the information available to respond to business surveys, and often appear to give 'inconsistent responses' to survey questions: these intangible assets can be forgotten by businesses. Second, since surveys on intangible assets are often carried out under the auspices of 'research' or through surveys on 'innovation', rather than official investment surveys, businesses may be primed to respond in one way or another. Thus, the framing of surveys on intangibles might be especially important. Third, definitions of intangible assets vary from researcher to researcher, and can often overlap or be unclear. While those assets included in the National Accounts have precise definitions, those measured outside the boundary do not. These terms, for businesses and researchers, are fuzzy. Finally, unlike most investments, the creation of intangible assets can take a long time. Most tangible assets can be made and purchased reasonably quickly, and/or the purchase date is clear for the business. In the case of intangibles, especially own-account investment (which is especially common for intangibles) the production process can be gradual over many periods. Asking businesses to provide investments in any given period might thus cause problems; the frequency of surveys could therefore be key. We establish these characteristics and demonstrate their impact on the quality of data on intangibles collected through business surveys in the UK through a range of data sources and microdata linkage. We draw on this research to propose modifications to surveys on intangible investment that might yield superior data.

Suggested Citation

  • Josh Martin & Cain Baybutt, 2022. "The 'F Words': Why Surveying Businesses About Intangibles is so Hard," Economic Statistics Centre of Excellence (ESCoE) Discussion Papers ESCoE DP-2022-20, Economic Statistics Centre of Excellence (ESCoE).
  • Handle: RePEc:nsr:escoed:escoe-dp-2022-20
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    References listed on IDEAS

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    1. Carol Corrado & John Haltiwanger & Daniel Sichel, 2005. "Measuring Capital in the New Economy," NBER Books, National Bureau of Economic Research, Inc, number corr05-1, March.
    2. Josh Martin, 2019. "Measuring the Other Half: New Measures of Intangible Investment from the ONS," National Institute Economic Review, National Institute of Economic and Social Research, vol. 249(1), pages 17-29, August.
    3. Martin, Josh, 2019. "Measuring the Other Half: New Measures of Intangible Investment from the ONS," National Institute Economic Review, National Institute of Economic and Social Research, vol. 249, pages 17-29, August.
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    Cited by:

    1. Josh Martin, 2022. "Methodological Developments for the Estimation of Own-account Software Investment in the UK," Economic Statistics Centre of Excellence (ESCoE) Discussion Papers ESCoE DP-2022-25, Economic Statistics Centre of Excellence (ESCoE).

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    More about this item

    Keywords

    business surveys; capital; data collection; intangible assets;
    All these keywords.

    JEL classification:

    • C81 - Mathematical and Quantitative Methods - - Data Collection and Data Estimation Methodology; Computer Programs - - - Methodology for Collecting, Estimating, and Organizing Microeconomic Data; Data Access
    • C83 - Mathematical and Quantitative Methods - - Data Collection and Data Estimation Methodology; Computer Programs - - - Survey Methods; Sampling Methods
    • E22 - Macroeconomics and Monetary Economics - - Consumption, Saving, Production, Employment, and Investment - - - Investment; Capital; Intangible Capital; Capacity

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