National Income and Economic Welfare Social Welfare

National Income and Economic Welfare

National Income has a close relationship with economic welfare and also has a positive co-relationship with each other. Economic welfare is relay have an important concept for every economic and also for social welfare. Economic welfare totally depends on the growth of National Income and its distribution. Economic welfare means prosperity level & living standard of an individual or a group of peoples in the society.

So we have two concepts about economic welfare –

ü  Change in the size of National Income

ü  Change in the distribution of National Income

National Income and Economic Welfare

Change in the size of National Income – the size of the national income has a positive relationship with economic welfare. If our national income increased then the people spend more money for goods & services. Its increase our economic welfare. If there is a negative or decrease in the size of national income then people decrease their expenditure on goods & services.

Economic welfare also depend on the real increase in our national income, it is not just due to a price high in current price index. If there is an increase in the income of rich people and no increase in the income of poor people then it is not a economic welfare.

Change in the distribution of National Income – distribution of our national income is also an important point. If there is a shift of money for rich people to poor people then we say that it is a concept which increases our economic welfare or equal distribution of National Income.

If there is shift of money from poor people to rich people or if we make such policy which supports the rich people then we can say that it is not a good one or positive for economic welfare. Policy like increase in working hour, give less than the minimum wages, lack in the facility in factory area or slum area etc, these things are against for the concept of economic welfare.

Also, if there is an increase in the national income then we assume that there is an increase in the personal income but if our population increase on the same rate, in this situation, there is no economic welfare. Also personal income does not have a positive relationship with economic welfare.