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The many definitions of income - Coggle Diagram
The many definitions of income
Household Income ( Ngọc )
Unrelated people
Income of all members of household resources
Family income ( Ngọc )
The earning of all members of family
Higher than individual income
Real Income (Tùng)
Based on
constant prices
.
Adjusted for inflation to accurately reflect purchasing power
adjusted for inflation
→ Correcting the value of income to reflect changes in the cost of living
purchasing power
→ The amount of goods and services that can be bought with the income
Nominal Income ( Tùng )
Based on
market prices.
The amount recorded at current prices, without adjusting for inflation
without adjusting for inflation
→ Raw income figure that does not consider changes in the cost of services
misleading over time
→ Can give a false picture when comparing incomes from different years because it ignores price changes.
Individual Income (Dat)
Definition: Earnings of a single person (wages, salaries, etc.).
Key Features:
Focuses on one earner.
Excludes shared household/family income.
Often stagnant (U.S. median wages).
Limitations:
Doesn’t reflect multi-earner households.
May underestimate economic stability.
.
Labor Income (Vi)
Money acquired from work
Excludes investment earnings
Narrow measure
Capital Income (Vi)
Earnings from dividends and retained earnings
Includes large cash influx when assets are sold
Broad measure
Disposable Income (Dat)
Definition: Money received from all sources after taxes and transfers
Key Features:
Labor + investment income
All government transfers (EITC, SNAP...)
Capital gains/losses and pensions
Limitations:
Masks true inequality due to social benefits
Doesn't account for regional cost differences
Marketincome(Trang)
Key Features
Excludes pensions and similar non-wage income sources.
Focuses strictly on earnings from labor and certain investments.
Limitations
Exclusion of pensions and similar income can understate resources for retirees or others relying on non-wage income.
Less useful for understanding total economic well-being across the population.
Definition: The narrowest definition used by the U.S. Census Bureau, similar to money income but more restricted
Money Income (Trang)
Definition: Regular cash income before taxes and excluding certain benefits
Key Features:
Includes only regular cash flows** (wages/pensions) but excludes capital gains and all non-cash benefits :
Pre-tax, pre-welfare baseline** used for measuring raw earnings inequality
Critically limited** by $999,999 reporting cap and exclusion of safety-net supports
Limitations:
Underestimates total resources (misses 25-30% of low-income support)
Overstates inequality (excludes redistributive benefits)
Doesn't reflect tax burdens