The national dividend is an alternative way to measure of the economic well being of a nation's people. Originally conceived by Irving Fisher back in 1906, it was one of three concepts that were proposed for that purpose, where the two competing proposals were subsequently developed over the following decades into what we know today as Gross Domestic Product.
Irving Fisher's concept fell by the wayside because of the difficulty in collecting the data on the goods and services consumed by American households needed to make it into an effective real-time measurement of their consumption. It wasn't until the 1980s that the Census Bureau began regularly collecting consumption data for U.S. households, and then it wasn't until 2015 that we realized that we could make Fisher's concept of a consumption-based measure of the economic well-being of American households a reality.
With that introduction now out of the way, we can now update the U.S.' national dividend through the end of 2016.
In 2016, we see that in nominal terms, the national dividend was flat for the first six months of the year, which then ticked up through November 2016 to reach its peak of just above $7.5 trillion, before turning back down again in December 2016.
But after adjusting for inflation, we see that 2016 was a rough one for American households, as their well-being declined from January 2016 through the middle of the year, before beginning to recover with the final outcome of being collectively no better off at the end of the year than they were at the beginning.
All that is a big reason why we now have a President Trump instead of another President Clinton. Politicians would benefit by paying more attention to the measure of the national dividend than they do to GDP.
References
Chand, Smriti. National Income: Definition, Concepts and Methods of Measuring National Income. [Online Article]. Accessed 14 March 2015.
Kennedy, M. Maria John. Macroeconomic Theory. [Online Text]. 2011. Accessed 15 March 2015.
Political Calculations. Modeling U.S. Households Since 1900. 8 February 2013.
Sentier Research. Household Income Trends: December 2016. [PDF Document]. 2 February 2017. [Note: We have converted all the older inflation-adjusted values presented in this source to be in terms of their original, nominal values (a.k.a. "current U.S. dollars") for use in approximating the national dividend.]
U.S. Bureau of Labor Statistics. Consumer Expenditure Survey. Total Average Annual Expenditures. 1984-2015. [Online Database]. Accessed 7 February 2017.
U.S. Bureau of Labor Statistics. Consumer Price Index - All Urban Consumers (CPI-U), All Items, All Cities, Non-Seasonally Adjusted. CPI Detailed Report Tables. Table 24. [Online Database]. Accessed 7 February 2017.
Previously on Political Calculations
The following posts will take you through our work in developing Irving Fisher's national dividend concept into an alternative method for assessing the relative economic well being of American households.
- Calculating the National Dividend - we revive Irving Fisher's concept for calculating a "national dividend".
- The National Dividend vs GDP - perhaps the best way to think of the national dividend is that it is the part of GDP that filters through to regular American households. As such, it's the part of GDP that matters.
- An Almost Perfect Correlation - we discover a unique relationship that enables our subsequent work to make the national dividend into a near-real time measure of the economic well-being of American households.
- Developing the National Dividend Into a Monthly Economic Indicator - just that!
- The National Dividend in 2015-Q2
- Replacing GDP with the National Dividend - our anniversary post from 2015!
- Calculating the U.S. National Dividend through April 2016
- Update: The National Dividend Through December 2016 - the post you just finished reading!
Labels: data visualization, economics
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