Household disposable income

Disposable income, as a concept, is closer to the concept of income generally understood in economics, than either national income or GDP. At the total economy level it differs from national income in that additional income items are included, mainly other current transfers such as remittances. For countries where these additional items form significant sources of income the importance of focusing on disposable income in formulating policy is clear. Another important difference between national income and disposable income reflects the fact that the latter concerns the share of national income that is allocated to households only. Disposable income can be seen as the maximum amount that a household can afford to spend on the consumption of goods or services without having to reduce its financial or non-financial assets or by increasing its liabilities.