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Income received by households and other persons from work, ownership and transfers, as defined in the economic accounts.
The US Bureau of Economic Analysis combines several components and subtracts contributions for government social insurance. Personal current taxes are then deducted separately to calculate disposable personal income. Some components are measured or adjusted under national-accounting conventions rather than taken directly from a household’s bank statement. A change in the total can therefore have different causes, including wages, asset income or transfers.
Consider a simplified hypothetical economy with 80 billion in employment income, 10 billion in business and asset income, and 15 billion in transfers, less 5 billion in the relevant social-insurance contributions. Personal income is 100 billion. If transfers rise by 3 billion while the other components remain unchanged, personal income rises to 103 billion even though employment income did not rise.
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