III.

Wealth and Income

Wealth must be distinguished from income. Both involve utility, scarcity, transferability, and measurability. Whereas wealth is an accumulation, a stock existing at a certain instant of time, income is a flow of goods and services during a certain period of time. Wealth may be regarded as a lake, and income as a stream flowing into and out of it. Thus an area of farmland is wealth, whereas the crop in any given year is income. By the same token an accumulation of grain in storage is wealth. The difference between income received and income consumed, wasted, or depreciated, as when grain deteriorates, is the measure of wealth accumulation.