The 'F Words': Why Surveying Businesses About Intangibles is so Hard (ESCoE DP 2022-20)


The ‘F Words’: Why Surveying Businesses About Intangibles is so Hard (ESCoE DP 2022-20)

By Cain Baybutt

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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.