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What’s the difference between GDP and GDI?

Conceptually, GDP (the value of everything produced) and gross domestic income (the value of everything earned by producing things) are identical. But in terms of the construction of statistical series, GDP is assembled by adding up spending on final goods and services while GDI measures aggregate income — wages and profits.

GDP = C[onsumption] + I[nvestment] + G[overnment purchases] + X [exports] - M [imports]

GDI = W[ages] + R[ental income] + I[nterest income] + P[rofits]

In theory, GDP should always equal GDI. In practice, that’s never the case. That’s because the BEA gets data on the two from different places, and the data isn’t always complete. The difference between the two numbers is called the statistical discrepancy and one thing that happens as the government revises the numbers in response to better data is that the discrepancy tends to shrink. GDP is the much more prominent measure, but there are some economists who believe GDI is more accurate.

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