Personal Disposable Income
Personal Disposable Income (PDY) is the term used to describe the part of personal income that is actually available at the disposal of a household. It is part of personal income that households keep after paying all taxes, fees, and other miscellaneous government receipts.
Personal Disposable Income (PDY) excludes Personal Taxes and Miscellaneous Government Receipts
Personal Income describes the total income received by households from all sources. PDY, on the other hand, is that part of personal income that each household is free to spend as they like, this means that it shows the purchasing power of the households. Therefore, the portion of a person’s income that is paid to the government is not included in PDY.
- Personal Taxes are not included in PDY because households must pay direct taxes like income tax, house tax, etc. to the government.
- The Miscellaneous Receipts of Government that households have to pay to the government in the form of fees, fines, etc. are also not included in the PDY.
Personal Disposable Income = Personal Income – Personal taxes – Miscellaneous Receipts of Government
Another Method to calculate Personal Disposable Income (PDY)
Households can spend their personal disposable income on consumption of goods and services or save for the future. Thus, PDY can also be calculated as follows:
Personal Disposable Income = Personal Consumption Expenditure + Personal Savings
Personal, National, and Gross National Disposable Income
Personal, National, and Gross National Disposable Income are three different types of income calculated by economists to measure the savings and spending rates of households and the whole country. Personal Disposable Income is part of personal income that is available at the disposal of a household. National Disposable Income is the income that is readily available for disposal to the entire nation. Gross National Disposable Income calculates income available for final consumption and gross saving to the nation.
Table of Content
- Personal Disposable Income
- National Disposable Income
- Gross National Disposable Income
- Difference between National Disposable Income and National Income
- Difference between National Disposable Income and Personal Disposable Income