What does income mean?

Income may have different definitions depending on the context—for example, taxation, financial accounting, or economic analysis. For most people, income is their total earnings in the form of wages and salaries, the return on their investments, pension distributions, and other receipts.

What is the difference between income and wealth?

Income and wealth are both key indicators of financial security for a family or an individual. Income is the sum of earnings from a job or a self-owned business, interest on savings and investments, payments from social programs and many other sources. It is usually calculated on an annual or monthly basis.

How do economists define income?

Although this is certainly a serviceable definition, working economists need a more precise one. Many economists use a comprehensive definition of income attributed to Robert Haig and Henry Simons, that income is equal to a person ’ s (household ’ s) consumption plus the increase in his or her net worth (Haig 1921, p. 7; Simons 1938, p. 50).