Why do we include the imputed value of good but not services why estimating production for self consumption /
Answers
why do we include the imputed value of good but not services why estimating production for self consumption / The imputed values of goods such as imputed rent of an owner-occupied room are taken into consideration while calculating National Income because the market values of these goods can be easily estimated.
Answer:
The imputed values of goods such as imputed rent of an owner-occupied room are taken into consideration while calculating National Income because the market values of these goods can be easily estimated. For example, an investment of Rs 10,000 made by an entrepreneur in his own business is included in the National Income because if he would have invested the same amount of money in some other investment alternatives, say in his saving account or in other's businesses, then he would have received more or less the similar interest amount (than what he gets from his business). Thus, the market value of his investment can be easily computed. Similarly, a man living in his own house need not to pay rent of (suppose Rs 10,000) every month. Therefore, the imputed rent of this man is included in the National Income as the rent for a similar house at the same locality can be estimated.
On the other hand, the values of services that are meant for self consumption are not included in the National Income because the market values of such services cannot be estimated. For example, a mother cooking food for her son, a father teaching his daughter. It is very difficult to estimate the market value of the dedication and love with which the mother is cooking food; the father is teaching her daughter. As such services are basically rendered with the motive of love and without any money considerations, so such services are not included in the National Income.
Hence, the imputed values of goods are included in National Income but the value of services meant for self-consumption or for family members are excluded from National income.