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DOES CONSUMPTION ENTAIL INCOME? IMPLICATIONS OF THE DUAL CLASSIFICATION OF CONSUMPTION EXPENDITURE FOR THE INCOME SIDE OF THE HOUSEHOLD SECTOR IN THE NATIONAL ACCOUNTS *
Author(s) -
Reich UtzPeter
Publication year - 1987
Publication title -
review of income and wealth
Language(s) - English
Resource type - Journals
SCImago Journal Rank - 1.024
H-Index - 57
eISSN - 1475-4991
pISSN - 0034-6586
DOI - 10.1111/j.1475-4991.1987.tb00668.x
Subject(s) - consumption (sociology) , economics , dual (grammatical number) , national accounts , autonomous consumption , aggregate expenditure , distribution (mathematics) , net national income , order (exchange) , measures of national income and output , aggregate income , consumption function , permanent income hypothesis , income distribution , aggregate (composite) , comprehensive income , public economics , labour economics , econometrics , microeconomics , macroeconomics , gross income , production (economics) , inequality , finance , life cycle hypothesis , art , social science , materials science , mathematics , mathematical analysis , literature , sociology , composite material , state income tax , tax reform
In the future revision of the SNA the dual classification of flows in the national accounts will gain some importance with respect to consumption expenditures. It is likely that outlays of different institutions for consumption are added to form a new aggregate “individual consumption.” The question is whether this development requires an adjustment on the income side of the household accounts. In order to find an answer it is first necessary to scrutinize the concept of disposable income in its standard form, and in its different variations. The result is a distinction between “disposable income in the strict sense” and “income after distribution,” where the standard definition actually realizes the latter concept. It is then shown that the dual structure of the accounts does not permit the adding of individual consumption to saving of households so that the concept of enlarged income defeats its purpose.