Median household income
The median household income is commonly used to generate data about geographic areas and divides households into two equal segments with the first half of households earning less than the median household income and the other half earning more. The median income is considered by many statisticians to be a better indicator than the average household income as it is not dramatically affected by unusually high or low values." The U.S. Census Bureau uses the following definitions of median and mean income:
Median income is the amount which divides the income distribution into two equal groups, half having income above that amount, and half having income below that amount. Mean income (average) is the amount obtained by dividing the total aggregate income of a group by the number of units in that group. The means and medians for households and families are based on all households and families. Means and medians for people are based on people 15 years old and over with income.
Household income is not to be confused with family or personal income. Household income is often the combination of two income earners pooling the resources and should therefore not be confused with an individual's earnings. Even though the term family income may sometimes be used as a synonym for household income, the U.S. Census Bureau defines the two differently. While household income takes all households into account, family income only takes households with two or more persons related through blood, marriage or adoption into account.
Median household income for selected countries is shown in the table below. The data for each country has been converted to U.S. dollars using purchasing power parity (PPP) (obtained from the Organisation for Economic Co-operation and Development).
This is what each equivalent adult in a household in the middle of the income distribution earns in a year.
Rank Country 2007 1 Luxembourg 34,407 2 United States 31,111 3 Norway 31,011 4 Iceland 28,166 5 Australia 26,915 6 Switzerland 26,844 7 Canada 25,363 8 United Kingdom 25,168 9 Ireland 24,677 10 Austria 24,114 11 Netherlands 24,024 12 Sweden 22,889 13 Denmark 22,461 14 Belgium 21,532 15 Germany 21,241 16 Finland 20,875 17 New Zealand 20,679 18 France 19,615 19 Japan 19,432 20 South Korea 19,179 21 Slovenia 18,860 22 Spain 18,391 23 Italy 16,866 24 Greece 15,758 25 Israel 14,055 26 Czech Republic 12,596 27 Portugal 12,515 28 Estonia 9,836 29 Poland 9,113 30 Slovak Republic 9,071 31 Hungary 8,531 32 Chile 7,851 33 Turkey 5,940 34 Mexico 4,689 — OECD 19,229
Median household income and the US economy
Since 1980, U.S. gross domestic product (GDP) per capita has increased 67%, while median household income has only increased by 15%. An economic recession will normally cause household incomes to decrease, often by as much as 10% (Figure 1).
Median household income is a politically sensitive indicator. Voters can be critical of their government if they perceive that their cost of living is rising faster than their income. Figure 1 shows how American incomes have changed since 1970. The last recession was the early 2000s recession and was started with the bursting of the dot-com bubble. It affected most advanced economies including the European Union, Japan and the United States.
The current crisis began with the bursting of the U.S. housing bubble, which caused a problem in the dangerously exposed sub prime-mortgage market. This in turn has triggered a global financial crisis. In constant price, 2010 American median household income is only 0.75% higher than what it was in 1989. This corresponds to a 0.04% annual increase over a 21-year period. In the mean time, GDP per capita has increased by 32.5% or 1.35% annually.
Equatorial Guinea Australia Iraq (war torn) GDP per capita (PPP) $31,837 (2009) $39,231 (2009) $1,900 Biggest export Oil Coal Oil Life expectancy 49.5 80.6 69.3 Infant mortality 87 5 68
A comparison between median household income and GDP per capita for developed countries is shown in the chart below. There is only a weak correlation (R=0.16) between GDP per capita and median household income.
- Mean household income
- Income distribution
- Income quintiles
- Household income in the United States
- International Ranking of Household Income
- Median household income in Australia and New Zealand
- Median income per household member
- Places in the United States with notable demographic characteristics
- Poverty in the United States
- ^ "U.S. Census Bureau: What is the difference between 'a median' and 'a mean'?". http://www.census.gov/hhes/www/income/about/faqs.html. Retrieved 2011-09-13.
- ^ "U.S. Census Bureau on the nature the median in determining wealth". http://www.census.gov/prod/2003pubs/p70-88.pdf. Retrieved 2006-06-29.
- ^ U.S. Census Bureau, Frequently Asked Question, published by First Gov.""U.S. Government, the different between mean and median". Archived from the original on 2006-09-22. http://web.archive.org/web/20060922200944/http://www.business.gov/topics/research_resources/market_research/census_bureau_faq.html. Retrieved 2006-06-29.
- ^ "OECD, PPP conversion rates". http://stats.oecd.org/Index.aspx?datasetcode=SNA_TABLE4. Retrieved 2010-03-01.
- ^ Society at a Glance 2011 - OECD Social Indicators], OECD, 12 April 2011.
- ^ IMF.org
- ^ Census.gov
- ^ BEA.gov
- ^ IMF GDP per capita
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