"Realized" Farm Income: An Outmoded Concept?

Ernest W. Grove

American Journal of Agricultural Economics, 1967, vol. 49, issue 4, 795-805

Abstract: "Realized" farm income estimates have been used for many years. They differ from "total" net income, a more recently developed series, only in that the latter includes the value of net changes, plus or minus, in farm inventories of crops and livestock. The "total" concept and series are in line with current requirements, but are frequently confused with the "realized" concept and series; so the question arises as to whether continuation of the "realized" series can be justified. After discussion of historical, theoretical, and statistical aspects of this question, a negative answer is given, because (1) the "realized" series has brought confusion, (2) it is contrary to accepted income theory, (3) it provides users with an undesirable choice of series, (4) it may be the less reliable of the two series, (5) it has omitted significant amounts of legitimate farm income, and (6) it has had an unrealistic smoothing effect on farm income estimates.

Date: 1967
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