A Note on National Income in a Dynamic Economy

We review the properties of the conventional static measure of changes in economic welfare, national income, in a dynamic economy. We show that it is possible to establish attractive welfare properties by rather simple arguments and that this variable can be estimated from current data. Its welfare properties are identical to those of the static measure: a small change is a potential Pareto improvement if and only if it leads to an increase in this variable. This gives national income welfare properties that are much preferable to those of net national product