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According to this TTIP paper, a European family of four will see their annual disposable income increase by €545 on average:

These gains can also be translated into household disposable income. One of the most widely quoted figures from the CEPR study is its estimation that a European family of four would see their annual disposable income increase by an average of €545 per year as a result of the agreement. This figure takes account not only of increases in wages and other household income but also price reductions.

If on average all European households gain €545, does my purchasing power actually increase? If not (what I presume), why is this seen as an advantage?

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  • $\begingroup$ So basically your question is: if everyone's income is raised by €545 does inflation cancel out the raise? $\endgroup$ – Giskard Oct 15 '15 at 5:55
  • $\begingroup$ @denesp exactly. If I would be to answer that question, I would say yes, it does cancel out based on high school economics. But it's written in a paper from the European Commission, so I wouldn't expect that it would be possible to find mistakes there based on high school economics. So maybe there is something special in this case why high school economics don't apply. $\endgroup$ – user5960 Oct 15 '15 at 6:06
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Interpreting the paper you linked:

a European family of four would see their annual disposable income increase by an average of €545 per year as a result of the agreement. This figure takes account not only of increases in wages and other household income but also price reductions.

This means that price changes have been taken into consideration and so this income change is already corrected for any inflation. It is possible that a trade deal results in more disposable income, for a basic example see Ricardo's theory of comparative advantages.

I can't say how this figure was arrived at by the paper because no explanation is given.


The following has very little to do with your question, it is more of a reaction to what I perceive to be your anti-TTIP stance. If I am mistaken, apologies.
I find that people who don't like TTIP focus on strange things even though there are some valid critiques. The paper you linked says that the gains are a result of, among other causes, a

more aligned regulatory systems agreed under the TTIP

Some critiques claim that the regulatory system will be closer to US regulation which favours companies over consumers. In terms of patent rights it may also not be optimal, though the effect of patent systems on long term growth is unclear anyway. I find that these are valid worries. Even if TTIP does decrease prices (which I think it will) there may be hidden costs. I don't know if there are, but I think it should be this that is scrutinized about TTIP.

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  • $\begingroup$ Thanks, that explains. I'm not particularly anti-TTIP, just trying to understand it. $\endgroup$ – user5960 Oct 15 '15 at 7:30

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