Income

The Concise Oxford Dictionary defines income as "receipts from one's lands, work, investment etc." This definition has been adapted by economic theory, where, for instance, a consumer may be said to maximize utility subject to an income constraint. The meaning of income is somewhat modified in the construction of income statistics, as generalized to national income.

Income in a microeconomic sense is the sum of earnings of all factors of production of an individual. It includes all benefits to consumers as part of income, even benefits arising from non-market activities – such as the monetary value of the services of owner-occupied housing or food grown and consumed on farms. This definition of income also includes periodic and one-time transfers such as pensions, unemployment benefits, and bequests.

See also: saving, consumption, life-cycle hypothesis

Literature: Simons (1938)

Entry by: Ralf Rodepeter

June 17, 1999
Direct questions and comments to: Glossary master