**1. Introduction**

The increasing importance of markets has involved an increasing volume of transactions and a consequent and progressive (re)organisation of the activity of society, which has focused its attention and needs on this process. This activity is known as being economic.

Associated to each market transaction are two or more flows with opposite directions, which are often denominated 'inflows' and 'outflows', which balance when the transaction is concluded. The nature of these flows can be the same or not; however, the balance means that when the transaction is concluded, both inflows and outflows have the same value. We can

© 2016 The Author(s). Licensee InTech. This chapter is distributed under the terms of the Creative Commons Attribution License (http://creativecommons.org/licenses/by/3.0), which permits unrestricted use, distribution, and reproduction in any medium, provided the original work is properly cited. © 2018 The Author(s). Licensee IntechOpen. This chapter is distributed under the terms of the Creative Commons Attribution License (http://creativecommons.org/licenses/by/3.0), which permits unrestricted use, distribution, and reproduction in any medium, provided the original work is properly cited.

thus think about the existence of a transaction of economic value, whose measurement is 'a premise for understanding economic activity' ([1], p. 12).

**2. The SAM framework**

**2.1. The macro SAM**

macro.

2

3

4

imports.

[namely, [7–9], and Pyatt and Round [namely, 10].

shot of the activity of Portugal in 2015, as described later.

to the rest of the world, respectively.

received from domestic activities2 and from the rest of the world3

value, and it does not include taxes and subsidies on production and imports.

Received by residents in the Portuguese economic territory working in the rest of the world.

The SAM represents the monetary or nominal flows occurring in a particular geographical space, during a given time period. As mentioned earlier, the version presented here is consistent with the rules and nomenclatures of the latest version of the SNA [2]. This is a version of the author, which was a result of research supported mainly by Stone [namely, 4–6], Pyatt

Using a Social Accounting Matrix for Analysing Institutions' Income: A Case from Portugal

http://dx.doi.org/10.5772/intechopen.78602

3

A SAM is a square matrix, with equal row and column sums. By convention, inflows are entries in rows, and outflows are entries in columns. Its adaptation to the SNA also allows one to state that the former describe resources, incomes, receipts or changes in liabilities, and net

**Table 1** represents a so-called "macro SAM", representing the highest aggregated level allowed by the national accounts, following a top-down method. From that level, the accounts (rows-columns) can be broken down into categories without losing the initial consistency. Numbers between brackets correspond to the application to Portugal in 2015, and it can be used to illustrate how the activity of a country in a specific year is portrayed with this SAM

Therefore, with production and institutions' accounts representing the (domestic) economy and the underlying transactions, the so-called "circular flow of income" can be identified and specified. On the other hand, by means of the rest of the world account, the transactions between the (domestic) economy and that of abroad can be identified. Let us first take a snap-

At the level of production accounts, the factors of production account show the aggregate or primary income generated in 2015, which is also designated as compensation of the factors of production, namely of labour and capital, which was in the sum of 162,306 million Euros. Reading in rows, this amount was respectively composed of 155,958 and 6347 million Euros,

amount was composed of 149,923 and 12,382 million Euros, paid to domestic institutions4 and

In turn, continuing at the level of the production accounts, the activities account shows, respectively, the production value and the total costs associated with the process of production, which totalled 318,313 million Euros. In rows, this amount represents the output of goods and services. In columns, it comprises 155,958 million Euros of compensation of factors of production, 161,475 million Euros of intermediate consumption, 1867 million Euros of net

Received by residents and non-residents working in the Portuguese economic territory. This amount is the gross added

Paid to residents in the Portuguese economic territory working in the Portuguese economic territory and in the rest of the world. This amount is the gross national income, and it does not include taxes and subsidies on production and

. Reading in columns, this

worth; whereas the latter describe uses, expenditures, or changes in assets.

The abovementioned (re)organisation of the activity of society also involves transfers, which are also flows, but with different characteristics from those associated with market transactions. Taxes, remittances, property income, social security system, and so on, are all the examples of these flows, which are nonreturn flows in a strict sense, but which balance at a macroeconomic level. When this facet is also considered, from the author's point of view, the term "socioeconomic" is more appropriate to designate this activity.

Interest in the measurement of these flows has been increasing, especially among researchers of the activity of society and by those involved in the policy decision process. Several types of statistics have focused on and registered different types of transactions; however, the national accounts have progressively made an effort to fully cover them. To this end, and also to allow comparability among countries, since 1953 an international system has been implemented to define rules and nomenclatures that can be adopted by countries or groups of countries and, in principle, better data. This system is now in its fourth version of 2008 in the case of the base system, which is known as the System of National Accounts (SNA) [2], and of 2010, in the case of the European system, which is known as European System of National and Regional Accounts (ESA) in the European Community [3].

Monetary or nominal flows and the so-called income are associated with at least one of the abovementioned directions of market transactions. Therefore, those who have income can intervene in the market, and the level to which this is possible is associated with well-being, power, and prestige, which justifies the importance of income and the attraction for it.

In this chapter, a social accounting matrix (SAM), adapted for the SNA, is used for studying the income of institutions, or institutional sectors–defined by that system as being groups of those "engaged in the full range of transactions… on the basis of their principal functions, behaviour, and objectives" ([2], Paragraphs 2.16 and 2.17). An application for Portugal in 2015 will illustrate the various sections. The purpose is to study (measuring and modelling) the impact of the introduction of a social policy measure on the increase in households' income, on the socioeconomic activity of a country, and also on the associated institutions' income<sup>1</sup> .

Section 2 presents the SAM framework, showing how society's activity is organised, using a top-down method, and also the underlying network of flows which can work together.

Covering the households' institutional sector of "all physical persons in the economy", and attributing to the (general) government institutional sector the political responsibility of, among others, "to redistribute income" ([2], Paragraph 2.17), Sections 3 and 4 focus on these two sectors. Thus, Section 3 identifies the structural features of the origin and use of the so called institutions' aggregate income. In turn, Section 4 simulates multiplier effects of a social policy measure of the increase in households' income, whereby the percentage changes regarding the original situation are compared with those that result from an identical increase, but with a different origin (compensation of labour).

A summary and some remarks conclude the chapter in Section 5.

<sup>1</sup> Social issues using SAMs were previously addressed by the Author, for instance, in [12–14].
