Net national income

Innational incomeaccounting,net national income(NNI) isnet national product(NNP) minusindirect taxes.Net national income encompasses the income of households, businesses, and the government. Net national income is defined asgross domestic productplus net receipts ofwages,salariesandproperty incomefrom abroad, minus thedepreciationoffixed capitalassets (dwellings, buildings, machinery, transport equipment and physical infrastructure) through wear and tear and obsolescence.

It can be expressed as

$$\mathrm {NNI} =\mathrm {C} +\mathrm {I} +\mathrm {G} +\mathrm {NX} +\left[{{\text{Net Foreign}} \atop {\text{Factor Income}}}\right]-\left[{{\text{Indirect}} \atop {\text{Taxes}}}\right]-\left[{{\text{Manufactured Capital}} \atop {\text{Depreciation}}}\right]$$

whereCdenotesconsumption,Idenotesinvestment,Gdenotesgovernment spending,andNXrepresents net exports (exportsminusimports:X – M).

This formula uses the expenditure method of national income accounting.

When net national income is adjusted for naturalresource depletion,it is calledAdjusted Net National Income,expressed as

$$\mathrm {NNI} ^{*}=\mathrm {NNI} -\left[{{\text{Natural Resource}} \atop {\text{Depletion}}}\right]$$

Natural resources are non-criticalnatural capitalsuch as minerals. NNI* does not take critical natural capital into account. Examples are air, water, land, etc.

For reference, capital (K) is divided into four categories:

• $K_{m}$:manufactured capital (machines, factories, etc.)
• $K_{h}$:human capital(workers' skills)
• $K_{n}$:non-critical natural capital (minerals)
• $K_{h}*$:critical natural capital (air, water)

See also

• National Income Accounting
• Gross domestic income
• Gross domestic product