What Are The Approaches Of Estimation Of National Income Or Measurement Of National Income?


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Joe McHugh answered
There are no definite ways to estimate national income, the purpose of these type of surveys is to produce the exact answer rather than to use guesswork or estimates. While something like this will never produce a result 100% accurate a result in the high nineties is perfectly acceptable. All surveys carry a margin of error.

    By analyzing tax returns and census details a government will be able to get accurate information on the levels of income enjoyed by the population. There will always be grey areas and some level of 'black economy', but by using as much information as possible and interpreting it correctly, you can build an accurate picture of the economy. Breaking down these statistics is useful for future planning and obviously provides an accurate guide for future tax income. With income details available it is also possible to interpret and predict other trends based on previous statistics.

    If incomes are high it allows a government to go on an increased policy of public spending for the greater good; if incomes are lower then it is prudent to be more careful over expenditure and perhaps reign in more ambitious schemes.

    Any approach at working out national income that isn't based on real data is certain to be badly flawed.

    Everyone will have opinions and ideas on income levels based on their own experiences but only properly researched data can be used to provide a true picture of income levels. Aggregating the data provides a fuller picture of income across a population, this can be used to evaluate average incomes as well as the overall wealth of an area. Interpreting the data accurately is essential, without that figures and statistics become largely meaningless.

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