Why is Net National Income (NNI) considered by some economists?

Net National Income (NNI) is considered by some economists as it provides a more accurate measure of a nation's economic performance.

NNI is a key economic indicator that measures the total income earned by a nation's residents, both domestically and internationally, after accounting for depreciation. It is a more comprehensive measure than Gross Domestic Product (GDP) as it includes income from overseas investments and excludes the loss of value in capital goods, providing a more accurate reflection of a nation's economic health.

Economists often prefer NNI over GDP because it takes into account the depreciation of a nation's capital stock. This is important because capital goods such as machinery, buildings, and infrastructure naturally wear out over time and need to be replaced. By subtracting depreciation from Gross National Income (GNI), NNI gives a clearer picture of the income available for consumption and saving.

Moreover, NNI includes income from overseas. This is particularly relevant for countries with significant foreign investments. For instance, if a British company has a profitable operation in another country, the profits from that operation would be included in the UK's NNI, but not in its GDP. This makes NNI a more global measure of a nation's economic performance.

Furthermore, NNI can be used to compare the economic performance of different countries. By using NNI per capita, economists can make more meaningful comparisons between countries with different population sizes. This can provide valuable insights into the standard of living and economic well-being in different countries.

In conclusion, NNI is considered by some economists because it provides a more accurate and comprehensive measure of a nation's economic performance. It takes into account depreciation and includes income from overseas, making it a valuable tool for economic analysis and comparison.