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Problems in measuring national income?this is a question of micro economics
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I would imagine that one of the greatest difficulties in measuring national income arises from what is called the "underground economy." That economy is composed of all transactions which are not subjected to income tax because they are "unofficial." For example, there are many people who are paid in cash or "under the table," meaning this is a transaction that is not reported anywhere we can "capture" it. They might be paid for products or services, but we have no way of knowing how much they are paid or that they are paid at all. Another kind of transaction that is frequently not reported is the barter. I believe the IRS considers barter transactions to be "income," but these are seldom reported.
In another area of income, we do not generally count as income some of the benefits we receive through our work. Health benefits are one example. My employer might pay $10,000 per year for my health insurance, but because I do not pay taxes on that money, it is not attributed as income to me.
There are no doubt other reasons this is a difficult number to measure, and there might be someone else who can discuss another aspect of this problem.
Posted by speamerfam on August 29, 2009 at 4:47 AM (Answer #1)
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