Statistics and National Income
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National Income
"National Income is the money value of all goods and services produced in a country during a year" J.M. Keynes.
However, according to Hicks: “we ought to define a man’s income as the maximum value which he can consume during a week, and still expect to be as well off at the end of the week as he was at the beginning” (Hicks, 1939, p. 172). According to such definition, National Income would be given by the total amount of incomes perceived within the national economic system over a certain time period (usually a year).
Such a definition looks more coherent from a perspective of economic “well-being” and, in turn, more relevant for “progress” measurement.
As clearly pointed out by Stiglitz’s Commission in its report, income should not be confused with product.
Nowadays, in Italy (but also for the other developed countries, and so on) the reasons of such distinction appear to be even more evident than before: just from a pure “accounting” point of view, whether in a autharchic country’s with a closed economy Gross National Product would correspond to the measurement National Income, with a globalised economy this doesn’t hold any more; moreover, ‘production’ relates to the supply side of the economy whereas ‘income’ refers to the ultimate purpose of production, namely use for consumption and higher standards of living. For these reasons, National Income is an important intermediate goal of the Global Project framework that, whether properly measured, can provide an important contribution to an increase in sustainable and equitable well-being. For example, from a “sustainability” standpoint, putting in practice Hicks’ definition would lead us to a measure of “sustainable” income: as a matter of fact, the Hicksian income is “sustainable” by definition.
Traditionally, NNP (or NDP) was considered the best measurement of the Hicksian income because, put simply, we could not consume all our GDP or GNP without getting poorer. However, as it has been already noticed, in a world of globalization, there may be large differences between the income of a country’s citizens and measures of domestic (but also national) production, but the former is clearly more relevant for measuring the well-being of citizens: once again according to Stiglitz & co., the household sector plays a particularly relevant role in terms of wellbeing and progress, and from households perspective income measures look much more appropriate than those of production (as matter of fact, some of the income generated by residents is sent abroad, and some residents receive income from abroad). These flows are captured by net national disposable income, a standard variable in national accounts, that in Italy has been calculated since 1996.
