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| Income is defined as the amount of money received by an individual during a specific period of time. An individual's income includes their salary, selling of goods and services, profits from investments and other aspects relating to generating revenue.<ref></ref> The term "income" could also be categorized as Capital Gain Income or Passive Income. Capital gain income would be interpreted as the selling price an individual receive from selling an investment minus the purchase price of the investment. On the other hand, Passive income would be revenue derived from owning assets, such as rental from properties, dividends from stocks and real estate investment trust, without actually doing any work.<ref></ref> | |||
| {{Short description|Wealth gained by a person or company within a given time period}} | |||
| {{About|theoretical attempts to define income|its definition in United States law|Income (United States legal definitions)}} | |||
| {{refimprove|date=October 2010}} | |||
| Taking into consideration a company's income statement, its gross profit would be the company's revenue minus its cost of goods sold. Furthermore, the company's net income would appear at the bottom of its income statement, after deducing all its expenses and taxes. Looking at the economic aspect of income, income is often associated to equality and the economy. When relating to the economy, income could potentially be viewed as income per capita, the average income earned per individual in a country. This is calculated by dividing the total income of the country by the country's population size. Many factors have significantly affect a country's income per capita. Aspects such as having better educational system, globalization and other factors.<ref></ref> | |||
| In ], '''income''' is the ] and ] opportunity gained by an entity within a specified timeframe, which is generally expressed in ] terms.<ref name="Smith">Smith's financial dictionary. Smith, Howard Irving. 1908. Income is defined as, "Revenue; the amount of money coming to a person or a corporation (usually interpreted as meaning annually) whether as payment for services or as interest or other profit from investment."</ref><ref>Webster's new modern English dictionary, illustrated. Webster, Noah. 1922. Income is defined as "the gain which proceeds from labor, business, property or capital; annual receipts of a person or corporation."</ref><ref name="Barr"/> | |||
| On the contrary, income inequality is how unevenly income is distributed over the country's entire population. The Gini Coefficient, also known as the Gini Index, can be used to measure the distribution of income inequality of a country, ranging from 0 to 1. If a country were to have a Gini coefficient of 0, it shows that the country has a perfect income equality while having a Gini coefficient of 1 means that the country has a perfect income inequality. The formula of the Gini coefficient is the area above the Lorenz curve over the sum of the areas above and below the Lorenz curve. | |||
| For ]s and individuals, income is a sum that includes any ], ], ], ] payment, ], or other form of earnings received in a given period of time<ref name="Case & Fair">Case, K. & Fair, R. (2007). ''Principles of Economics''. Upper Saddle River, NJ: Pearson Education. p. 54.</ref> (also known as ]). Net income is defined as the gross income minus ]es and other deductions (e.g., mandatory ] contributions), and is usually the basis to calculate how much ] is owed. | |||
| In the field of ], the concept may comprise the accumulation of both monetary and non-monetary consumption ability, with the former (monetary) being used as a proxy for total income. | |||
| For a firm, gross income can be defined as sum of all ] minus the ]. ] nets out expenses: net income equals revenue minus cost of goods sold, ], ], interest, and taxes.<ref name="Barr"> | |||
| Barr, N. (2004). Problems and definition of measurement. In ''Economics of the welfare state''. New York: Oxford University Press. pp. 121–124 | |||
| </ref> | |||
| ==Economic definitions== | |||
| In ], "]" is the return accruing for a person, or a nation, derived from the "factors of production": rental income, wages generated by labor, the interest created by capital, and profits from entrepreneurial ventures.<ref>{{cite web|title=factor income|url=http://www.businessdictionary.com/definition/factor-income.html|work=BusinessDictionary.com|publisher=WebFinance, Inc|access-date=20 June 2012|author=Staff|year=2012}}</ref> | |||
| In ] 'income' is another name for the "budget constraint," an amount <math>Y</math> to be spent on different goods x and y in quantities <math>x</math> and <math>y</math> at prices <math>P_x</math> and <math>P_y</math>. The basic equation for this is | |||
| :<math>Y=P_x \cdot x + P_y \cdot y</math> | |||
| This equation implies two things. First buying one more unit of good x implies buying <math>\frac{P_x}{P_y}</math> less units of good y. So, <math>\frac{P_x}{P_y}</math> is the ''relative'' price of a unit of x as to the number of units given up in y. Second, if the price of x falls for a fixed <math>Y</math> and fixed <math>P_y,</math> then its relative price falls. The usual hypothesis, the ], is that the quantity demanded of x would increase at the lower price. The analysis can be generalized to more than two goods. | |||
| The theoretical generalization to more than one period is a multi-period ] and income constraint. For example, the same person can gain more productive skills or acquire more productive income-earning assets to earn a higher income. In the multi-period case, something might also happen to the economy beyond the control of the individual to reduce (or increase) the flow of income. Changing measured income and its relation to consumption over time might be modeled accordingly, such as in the ]. | |||
| ===Full and Haig–Simons income=== | |||
| {{Main article|Haig–Simons income}} | |||
| "Full income" refers to the accumulation of both the monetary and the non-monetary consumption-ability of any given entity, such as a person or a household. According to what the economist ] 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.<ref name="Barr"/> As such, however, it is criticized{{by whom|date=July 2015}} for being unreliable, ''i.e.'' failing to accurately reflect affluence (and thus the 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 ]. 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. | |||
| == Income growth == | |||
| ] has been increasing steadily in most countries.<ref>. ].</ref> Many factors contribute to people having a higher income, including ],<ref>. ].</ref> ] and favorable political circumstances such as ] and ]. Increases in income also tend to lead to people choosing to work fewer ]. | |||
| ] (defined as countries with a "developed economy") have higher incomes as opposed to ] tending to have lower incomes. | |||
| ==Income inequality== | |||
| ] is the extent to which income is distributed in an uneven manner. It can be measured by various methods, including the ] and the ]. Many economists argue that certain amounts of inequality are necessary and desirable but that excessive inequality leads to efficiency problems and social injustice.<ref name="Barr"/> Thereby necessitating initiatives like the United Nations ] aimed at reducing inequality.<ref>{{Cite web|title=Goal 10 targets|url=https://www.undp.org/content/undp/en/home/sustainable-development-goals/goal-10-reduced-inequalities/targets.html|access-date=2020-09-23|website=UNDP|language=en}}</ref> | |||
| National income, measured by statistics such as ] (NNI), measures the total income of individuals, corporations, and government in the economy. For more information see ]. | |||
| ==Income in philosophy and ethics== | |||
| Throughout history, many have written about the impact of income on ] and ]. ] wrote 'For the love of money is a root of all kinds of evil:' (] (])). | |||
| Some scholars have come to the conclusion that material progress and prosperity, as manifested in continuous income growth at both the individual and the national level, provide the indispensable foundation for sustaining any kind of morality. This argument was explicitly given by ] in his ''Theory of Moral Sentiments'',<ref>{{Cite book|last=Smith|first=Adam|url=https://www.worldcat.org/title/theory-of-moral-sentiments/oclc/1017407319|title=The theory of moral sentiments|date=|publisher=Clarendon|year=2009|isbn=|location=Oxford|pages=|language=English|oclc=1017407319}}</ref> and has more recently been developed by Harvard economist ] in his book ''The Moral Consequences of Economic Growth''.<ref>{{Cite book|last=Friedman|first=Benjamin M|url=https://www.worldcat.org/title/moral-consequences-of-economic-growth/oclc/71353264|title=The moral consequences of economic growth|date=2006|publisher=Vintage Books|isbn=978-1-4000-9571-1|location=New York, NY|language=English|oclc=71353264}}</ref> | |||
| ==Accountancy== | |||
| The ] (IASB) uses the following definition: "Income is increases in economic benefits during the accounting period in the form of inflows or enhancements of assets or decreases of liabilities that result in increases in equity, other than those relating to contributions from equity participants." (IFRS Framework). | |||
| According to ], income "is the maximum amount which can be spent during a period if there is to be an expectation of maintaining intact, the capital value of prospective receipts (in money terms)”.<ref>{{cite web|title=Oxbridge Notes|url=https://www.oxbridgenotes.co.uk/revision_notes/accounting-lse-financial-accounting-analysis-and-valuation/samples/5-hicks-income|access-date=18 August 2016}}</ref> | |||
| ==History== | |||
| John Hicks used "I" for income, but ] wrote to him in 1937, "''after trying both, I believe it is easier to use Y for income and I for investment.''" Some consider Y as an alternative letter for the phonem I in languages like Spanish,<ref>{{cite web|url=http://gregmankiw.blogspot.com/2016/12/why-y.html|title=Why Y?|date=December 21, 2016|website=Greg Mankiw's Blog}}</ref> although Y as the "]" was actually pronounced like the modern German ü or the phonetic /y/. | |||
| ==See also== | |||
| {{Wiktionary|income}} | |||
| * ] | |||
| * ] | |||
| * ] | |||
| * ] | |||
| ==References== | ==References== | ||
| <ref>https://www.investopedia.com/terms/p/percapita.asp</ref> | |||
| {{reflist}} | |||
| https://www.investopedia.com/terms/i/income-inequality.asp | |||
| * D. Usher (1987). "real income," ''The ]'', v. 4, pp. 104–5 | |||
| https://fourpillarfreedom.com/types-of-income/ | |||
| https://en.wikipedia.org/Economic_inequality | |||
| {{Authority control}} | |||
| ] | |||
Revision as of 06:13, 21 November 2021
Income is defined as the amount of money received by an individual during a specific period of time. An individual's income includes their salary, selling of goods and services, profits from investments and other aspects relating to generating revenue.Cite error: There are <ref> tags on this page without content in them (see the help page). The term "income" could also be categorized as Capital Gain Income or Passive Income. Capital gain income would be interpreted as the selling price an individual receive from selling an investment minus the purchase price of the investment. On the other hand, Passive income would be revenue derived from owning assets, such as rental from properties, dividends from stocks and real estate investment trust, without actually doing any work.Cite error: There are <ref> tags on this page without content in them (see the help page).
Taking into consideration a company's income statement, its gross profit would be the company's revenue minus its cost of goods sold. Furthermore, the company's net income would appear at the bottom of its income statement, after deducing all its expenses and taxes. Looking at the economic aspect of income, income is often associated to equality and the economy. When relating to the economy, income could potentially be viewed as income per capita, the average income earned per individual in a country. This is calculated by dividing the total income of the country by the country's population size. Many factors have significantly affect a country's income per capita. Aspects such as having better educational system, globalization and other factors.Cite error: There are <ref> tags on this page without content in them (see the help page).
On the contrary, income inequality is how unevenly income is distributed over the country's entire population. The Gini Coefficient, also known as the Gini Index, can be used to measure the distribution of income inequality of a country, ranging from 0 to 1. If a country were to have a Gini coefficient of 0, it shows that the country has a perfect income equality while having a Gini coefficient of 1 means that the country has a perfect income inequality. The formula of the Gini coefficient is the area above the Lorenz curve over the sum of the areas above and below the Lorenz curve.
References
https://www.investopedia.com/terms/i/income-inequality.asp https://fourpillarfreedom.com/types-of-income/ https://en.wikipedia.org/Economic_inequality