What does the Haig-Simons definition of income comprise?

The Haig-Simons definition of income provides a comprehensive view of what constitutes income, focusing on the ability to consume. This definition asserts that income includes not just the cash or market income received, but also the economic value derived from the use and enjoyment of assets.

Specifically, it combines two major elements: the market value of rights that have been exercised in consumption, which refers to the value one receives from consuming goods and services, and the changes in property rights, which accounts for any increase or decrease in an individual's wealth over the year. This approach highlights that income should reflect the total economic resources available to an individual, whether through consumption or ownership changes.

By considering both consumption and changes in property rights, this definition is more aligned with a broad view of economic income compared to definitions that only focus on cash received or immediate market transactions.