I got Covid this week and still tried to keep doing something else apart from my work. So, I continue reading the book The Theory of Interest by I.Fisher
I think I have never thought of defining income. What is income? Income to a labourer like myself means the money or just some numbers received every month (Sad..). It is intuitive. But in Fisher’s book, the salary we received is not exactly money income. And there are two more types of income called real income and psychic income.
Psychic income is the ultimate income. In short, money is of no use until it is spent and makes us happy. Our mind is stimulated through interaction with the physical world. I am thinking maybe one day we can just live in a dream and everyone can have infinite psychic income. We may even get rid of our body as if after all it is just our psychic mind that is important, why do we need a physical body? Joke aside, psychic income is not measurable. We go down one level to the physical world.
Real income, sometimes called objective income is the money you spent. The money spent gives us inner enjoyment. Therefore, real income can be approximated by the cost of living. A small detail is that sometimes, money spent is not simply for temporary use. We need a way to distribute the cost into the object’s lifetime. I think this is the accountant’s job. In short, we should always calculate the cost of services but never the cost of objects directly.
Money income is the money you received which is not devoted to reinvestment. Money income is usually different from real income. If you save your salary, your money income is higher than your real income. If you spend more than you earned, your money income is lower than your real income.