Relation between Economic Welfare And National Income 

Alfred Marshal prof. A. C Pigou  and J.R.Hicks  say that there is a close relationship between economic welfare and national income,  because both of them are measures in the term of money.   When national income increase, total welfare also increases and vice versa.

The effect of National Income on economic welfare can be study in two ways:-. 

• By change in the size of National Income 

• By change in the distribution of National Income 

(1):-  The change in the size of National Income.

The positive change in the national income increases its volume. As a result people consume more of goods and services which lead to increase in the economic welfare where as the negative change in the national income, result in reduction of its volume. people get laser goods and services for consumption which leads to decrease in economic welfare.

(2):- The  change in the Distribution of National Income 

The distribution of national income takes place in two ways, firstly by transferring wealth form poor to reach and secondly, from the  Rich to the poor but it is advisable to follow the second way in the distribution of national income.

The actual relation between the distribution of national income and economic welfare Concerns  the transfer of wealth flow from the rich to the poor. The redistribution of wealth in favour of the poor is brought about by reducing the wealth of rich and increasing the income of the poor.

The  increase in national income leads to increase in economic welfare provided that the income of the poor increases in instead of decreasing and they improve their standard of living and that the income of the rich decreases in such a way that their are productive capacity. Investment and capital accumulation do not decline.