The Comparison of Kibbutz Productivity to National Statistics: Analysis and Remarks

This study examines conceptual problems in measuring product and disposableincome of the kibbutz and in comparing them with the relevantnational data. The inquiry was prompted by Kroll and Polovin’s paper inthis Journal (1997), in which the authors found that per capita product anddisposable income of the kibbutz are significantly lower than the nationalaverage in Israel. To carry out the analysis, we develop a formal-conceptualmodel of a national economy which consists of several sectors. Using thismodel it is shown that the “terms of trade” between the sectors – and theincome transfers involved – have a marked effect on the per capita incomein each sector, independent of its own productivity. In particular, twodownward accounting biases may account for the results of Kroll andPolovin, regarding the kibbutz economy: the “interest effect” and the “taxeffect”. We hope that this analysis will contribute to a better understandingof this issue, and also – more generally – to the national accounting theory.