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Three uses of National Income Statistics

The Cycle


Utilization of NI statistics

NI statistics may be analyzed and utilized for many reasons. These include comparing countries, making economic forecasts, to improve government or business policies and actions or to understand if an organization has been successful in reaching its macroeconomic goals.

One of the main uses of national income data is to recognize if a nation (government) has chosen the correct economic policies. Every single government on earth strives to achieve economic growth. Economic growth is defined as a country’s national income over time. Consequently government agencies and departments examine such data to comprehend if government aims have been reached. After the statistics have been analyzed the organization in question may choose to change policies or create new ones to stimulate economic growth if the objectives have not been achieved. However if the objectives have been accomplished, the government would normally also instigate changes to increase even more economic growth and expansion. For these changes, organizations utilize national income statistics for a different reason.

To understand changes that need to be made, a government economic agencies use national income calculations to make predictions of the future, through analysis or graphs, data and diagrams. Economists recognize trends, which may be obvious or surreptitious. If these trends are positive, economists recommend that government policies are not modified. If not, economists often advise drastic changes to improve current outlooks towards the future.

Another use of national income statistics is as a basis to compare countries, either directly or by economic growth or living standards. Rising national incomes is often equated to rising living standards. This measures people’s general wellbeing and wealth. If two countries are compared, the nation with a higher value of national income is stated to be more developed and advanced, as its people enjoy better living standards.

Thus, one may observe that national income data may be utilized in many various ways to come to better understanding of the present or to create forecasts of the economic future and recognize trend, which may in time become reality.


Promise on May 05, 2016:

so in that case do we need national income to measure wealth of the country?

doctor chings on March 25, 2015:

it is of better use

Andro Mathewson (author) from Germany on July 26, 2013:

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It is national income, which shows the money in circulation of the nation, so technically the more money in circulation there is, the wealthier the nation and its people are!

CHRIS57 from Northern Germany on July 26, 2013:

...NI is useful to measure the wealth of a nation..

Please, what does income have to do with wealth? Income can be created by destroying wealth. Actually that is what happened/happens to Club Med or the USA if you like.

So how can income be used to measure wealth? Not clear to me.

Andro Mathewson (author) from Germany on July 25, 2013:

I do indeed see and understand what you mean. I personally only believe that NI is useful to measure the wealth of a nation. Thx for the comment

CHRIS57 from Northern Germany on July 24, 2013:

Like the word says: Only believe the statistics you faked yourselves!

IMHO the NI is just another artificial figure to express whatever you may want to express. One little example: How can forecasts be made and trends be identified if no difference is made between producing and servicing, between consuming and creating assets?

Any economic entity, being it a private corporation, a family household or an entire nation can only be judget by what it does to make the future better. And growth in NI does not necessarily allow any insight. However figures about investment into the future (capital or intellectual asset creating) are of help. That is what is written on the balance sheet of a company, that is what families unvoluntarily do by buying a house, by spending on the education of their kids.

So National Income, or GDP in its output definition are of very limited use. It makes me very uneasy that this phoney, half baked definition is used to explain and understand the state of an economy. May be that is the reason why things get off track so often :-)

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