Uses of National Income Statistics 

1. Indication of alterations in our standard of living

Any change in our national income figures will indicate the level of economic growth, or otherwise, within the country from one year to the next, and give a general indication of changes to the standard of living, if any. Used by trade unions to justify wage demands.

2. Means of comparing the standard of living in different countries.

We can use the national income statistics to compare the standard of living in our country with that of other countries.

3. Assists the government in formulating economic policy.

Governments have a greater influence on the development and growth of the economy. To effectively plan for this governments’ need information about our economy such as that provided by the National Income statistics.

4. Evaluate economic policy

To assess changes to the economy and economic changes in the various sectors, and to provide a benchmark against which progress can be monitored, it is useful to have national statistics.

5. EU Budget Contributions / Benefits

The wealth revealed in our national income statistics will determine the contribution, if any, which Ireland must make to the EU budget. The figure will also be used within the EU to determine those countries which require financial aid from the EU and the amount of that aid

Critique the limitations of these measures (National Income) of economic performance

  1. National income statistics measure growth not welfare
  2. May be affected by population growth
  3. Non-market economic activities are not included eg growing own vegetables
  4. Changes in quality of goods not taken into account
  5. ‘Bads’ as well as ‘goods’ included eg money spent to repair storm damage
  6. The problem of inflation measured at current rather than constant prices isn’t taken into account
  7. The balance between the production of capital and consumer goods isn’t highlighted
  8. Leisure has not been taken into account. People may be working longer for the same income
  9. Distribution of any increase in national income isn’t highlighted
  10. It is difficult to account for the black economy
  11. Externalities eg pollution aren’t included

Limitations in international comparisons of national income statistics

  1. Size of population in each country must be known
  2. The distribution of the national income may not be the same in each country
  3. The nature of expenditure may differ greatly from country to country
  4. Some countries are more market oriented than others (Degree of self-sufficiency differences)
  5. The statistics must be converted to a common currency
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