Page "Income" Paragraph 8

Full income refers to the accumulation of both, monetary and non-monetary consumption ability of any given entity, such a person or household.

According to the what economist Nicholas Barr describes as the " classical definition of income :" the 1938 Haig-Simons definition, " income may be defined as the ... sum of ( 1 ) the market value of rights exercised in consumption and ( 2 ) the change in the value of the store of property rights ..." Since the consumption potential of non-monetary goods, such as leisure, cannot be measured, monetary income may be thought of as a proxy for full income.

As such, however, it is criticized for being unreliable, i. e. failing to accurately reflect affluence and that is consumption opportunities of any given agent.

It omits the utility a person may derive from non-monetary income and, on a macroeconomic level, fails to accurately chart social welfare.

According to Barr, " in practice money income as a proportion of total income varies widely and unsystematically.

Non-observability of full-income prevent a complete characterization of the individual opportunity set, forcing us to use the unreliable yardstick of money income.

" On the macro-economic level, national per-capita income, increases with the consumption of activities that produce harm and omits many variables of societal health.