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The BEA (US Bureau of Economic Analysis) that produces the GDP and GDI also prepares a summary of Personal Income for the nation.

In that it includes employer contributions for both private pensions and insurance as well as the employer contributions for government social insurance such as social security and medicare.

Later on "transfer payments" from both private and government programs are also added.

Finally, personal payments for social security etc are deducted.

To me it seems that including employer contributions that are not available as income and are counted later in transfers seems like double counting and also doesn't agree with elementary macro economic texts that define national personal income as not including such contributions. In fact these contributions are carried into "Disposable Personal Income" which seems clearly wrong. Am I missing something?

Table 2.1 from BEA

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After reading the comments, part of the issue may simply be that I'm not good at accounting, but I understand part of this better. I agree there is no double counting. But, in the image below (just looking at social security)

enter image description here

I'm OK with gross "personal income" at the aggregate level including line 8 and the net of lines 18 and 25. But if one thinks of Social Security as a big savings account, then line 8 belongs in personal savings and not disposable personal income. No?

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  • $\begingroup$ Social Security is not really included in Personal Income it appears for nomenclature reasons but then line 25 fully subtracts it and is not included in line 1 $\endgroup$ – Alecos Papadopoulos Jun 16 '17 at 16:10
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Statistical Agencies do not necessarily obey the habits of Economic Theory. There is no "mistake" here (certainly, there is no double-counting), but a different approach to what each concept means or "should mean" (which sometimes is also a consequence of historical precedence).

For the fun of it I post below how the same data could be arranged to conform with standard theoretical economics, where we make a point of distinguish between income earned, taxes in the broad sense, transfers, consumption, saving.

ALTERED/RE-ARRANGED BEA TABLE 2.1. "Personal Income and Its Distribution"

enter image description here

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Thats why transfer payments are not supposed to be counted in GDP, only private and government wages and salaries. But there is no way to tell what the BEA actually does, and this would be the least of their inconsistencies anyway.

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