# Concepts and definitions

Disposable money income

Households' disposable money income includes monetary income items and benefits in kind connected to employment relationships. Money income does not include imputed income items, of which the main one is imputed rent.

The formation of disposable money income can be described as follows:

+ wages and salaries

+ entrepreneurial income

+ property income (without imputed rent)

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= factor income

+ current transfers received (without imputed rent)

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= gross money income

– current transfers paid

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= disposable money income

When current transfers paid are deducted from gross money income, the remaining income is the household's disposable money income.

The primary income concept used in the income distribution statistics is household's disposable money income according to international recommendations, in which case sales profits and taxes paid on them do not belong to the scope of the income concept. Following international recommendations, they are treated as a memorandum item outside the income concept.

The concept of disposable money income in the total statistics on income distribution differs from disposable money income in the income distribution statistics. As a conceptual difference, the income concept of the total statistics on income distribution includes taxable realised capital gains. For practical reasons, the total statistics on income distribution do not include the majority of interest income and current transfers received and paid between households (e.g. child maintenance support). Real property tax is not deducted in the total statistics on income distribution either.

GINI co-efficient

The Gini coefficient is the most common indicator describing income differences. The higher value the Gini coefficient gets, the more unequally is income distributed. The biggest possible value for the Gini coefficient is one. Then the highest earning income recipient receives all the income. The smallest Gini coefficient value is 0, when the income of all income recipients is equal. In the income distribution statistics, Gini coefficients are presented as percentages (multiplied by one hundred). The Gini coefficient describes relative income differences. The Gini coefficient does not change if the incomes of all income earners change by the same percentage.

Household

A household is formed of all those persons who live together and have meals together or otherwise use their income together. The concept of household is only used in interview surveys.

Excluded from the household population are those living permanently abroad and the institutional population (such as long-term residents of old-age homes, care institutions, prisons or hospitals).

The corresponding register-based information is household-dwelling unit. A household-dwelling unit is formed of persons living permanently in the same dwelling or address. More than one household may belong to the same household-dwelling unit. The concept of household-dwelling unit is used in register-based statistics in place of the household concept.

Reference person

In the income distribution statistics and in the statistics of household's assets the person with the highest personal income is chosen as the household's reference person. Personal income is defined according to register data and interview data.

Although income is the main criterion determining the reference person, in some cases (e.g. entrepreneur households) the activity of the whole household is taken into account. Households of pensioner parents with children (including those over the age of consent) are also special cases where the parent with the higher income is selected as the reference person if the combined incomes of the parents clearly exceed those of a child.

Referencing instructions:

Official Statistics of Finland (OSF): Households’ assets [e-publication].
ISSN=2242-3230. Helsinki: Statistics Finland [referred: 18.3.2018].
Access method: http://www.stat.fi/til/vtutk/kas_en.html

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