Haig–Simons income

Haig–Simons income, Schanz–Haig–Simons income, or Haig-Simons-Hicks income is an income measure used by public finance economists which defines household income as consumption spending plus change in net worth. It is represented by the accounting identity:

Haig-Simons Income = Household consumption spending + Change in household-sector wealth (ΔNet Worth)

The biggest difference between Haig-Simons income and more widely-employed Household or Personal income is the inclusion of accrued household holding or "capital" gains in the Haig-Simons measure. In simplified accounting-identity terms:

Household or Personal income + Accrued nominal holding gains (net of losses) = Haig-Simons income
Haig-Simons income - Consumption spending = Haig-Simons "saving" = Change in household-sector wealth (∆NW)

Much of the discussion surrounding Haig-Simons income revolves around tax policy, but more broadly the measure is fundamental to understanding national-accounting stock and flow measures, and the use of those measures in economic analysis, theory, and modeling. It is especially pertinent to analysis of lifetime incomes and wealth accumulation.

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