If money circulates among corporations but does not change personal income, then the metric remains constant.
This is true of GDP as well, since GDP only includes final goods. I.e. if a farmer produces wheat, and the wheat is then used to produce bread, the farmer -> baker transaction is excluded from GDP. Only the baker -> consumer transaction counts towards GDP.
If you want to try and measure utility, your metric should be based on consumption - e.g. mean(log(after tax consumption)). Income isn't utility, it's only potential utility.
If we used income, your metric would unfairly penalize volatile income. I.e., a person with a stable income of $50k/year would be considered 70% better than a person who earns $100k then $0k (saving $50k in the first year and spending it in the second while having an identical lifestyle.
This is true of GDP as well, since GDP only includes final goods. I.e. if a farmer produces wheat, and the wheat is then used to produce bread, the farmer -> baker transaction is excluded from GDP. Only the baker -> consumer transaction counts towards GDP.
If you want to try and measure utility, your metric should be based on consumption - e.g. mean(log(after tax consumption)). Income isn't utility, it's only potential utility.
If we used income, your metric would unfairly penalize volatile income. I.e., a person with a stable income of $50k/year would be considered 70% better than a person who earns $100k then $0k (saving $50k in the first year and spending it in the second while having an identical lifestyle.