Market income & disposable income: when economists talk about income inequality, what exactly do they mean by “income?”

The income inequality chart

 the media never show you

by James Pethokoukis

When economists talk about income inequality, what exactly do they mean by “income?” Usually they are talking about market income, which is, as described in an enlightening new Minneapolis Fed paper, “wages, salaries, business and farm income, interest, dividends, rents and private transfers (such as alimony and child support), of all household members.”

Then you have disposable income, which includes market income but also adds in “all government transfers (such as Social Security, unemployment insurance and welfare) and subtracts tax liabilities. This is a measure of resources actually available to household members for spending.”

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Read more: www.aei-ideas.org