This paper proposes a new framework for the measurement of national income which generalises and unifies the existing approaches. We begin by defining the maximum discounted utility which the economy can achieve starting from any initial capital stock vector. Using this we can then immediately formalise the Hicksian notion of income as the maximum amount which the economy could consume at a particular moment of time and leave it just as well off (in terms of the maximum present value of future consumption) as it was before. The measure of income so derived is in units of account (dollars). We then derive three key results.

We show that under a mild assumption this definition is formally identical to that by Weitzman (1976).

The correction terms for GNP advocated by Hartwick (1990) emerge as a special interpretation of this measure in the context of natural resource depletion.

The interpretation which Weitzman gave to national income as a permanent income measure of the economy’s future consumption possibilities (its wealth) carries over to this context. The only difference is that, since interest rates are not in general constant, the appropriate rate of interest to use is in establishing this connection between income and wealth is a consumption-weighted average of the interest rates on the optimum path.