The median household income is commonly used to provide 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 household is the basic unit of analysis in many Social, Microeconomic and Government models In Probability theory and Statistics, a median is described as the number separating the higher half of a sample a population or a Probability distribution  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. Statisticians or people who made notable contributions to the theories of Statistics, or related aspects of Probability, or Machine learning. In Mathematics, an average, or central tendency of a Data set refers to a measure of the "middle" or " expected " value of "
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. In Probability theory and Statistics, a median is described as the number separating the higher half of a sample a population or a Probability distribution Income inequality metrics or income distribution metrics are techniques used by economists to measure the distribution of Income and Economic inequality Mean income (average) is the amount obtained by dividing the total aggregate income of a group by the number of units in that group. In Statistics, mean has two related meanings the Arithmetic mean (and is distinguished from the Geometric mean or Harmonic mean In Mathematics, an average, or central tendency of a Data set refers to a measure of the "middle" or " expected " value of 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. Personal income is a measure utilized by the United States government particularly the Department of Commerce, to determine the income of individuals 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 US 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 US dollars using purchasing power parity (PPP) (obtained from the Organisation for Economic Co-operation and Development). The purchasing power parity ( PPP) theory uses the long-term equilibrium Exchange rate of two currencies to equalize their Purchasing power.  Note that PPP-adjusted household income is not reflective of relative buying power (or prosperity) between countries because different governments subsidize different services (see Common Misunderstandings section).
|Country||Median household income national currency units||Year||PPP rate (OECD)||Median household income (PPP)|
|Switzerland||95,184 CHF||2005||1. Switzerland (English pronunciation; Schweiz Swiss German: Schwyz or Schwiiz Suisse Svizzera Svizra officially the Swiss Confederation The franc ( German: Franken, French and Romansh: franc, Italian: franco; code: CHF 74||$55,000|
|California, US||US State||$54,000|
|United States||$48,000 USD||2006||1. California ( is a US state on the West Coast of the United States, along the Pacific Ocean. The United States of America —commonly referred to as the The United States dollar ( sign: $; code: USD) is the unit of Currency of the United States; it has also been 00||$48,000|
|Canada ||$53,634 CAD||2005||1. Country to "Dominion of Canada" or "Canadian Federation" or anything else please read the Talk Page 21||$44,000|
|New Zealand ||$62,556 NZD||2007||1. New Zealand is an Island country in the south-western Pacific Ocean comprising two main landmasses (the North Island and the South Island The New Zealand dollar ( sign: $; code: NZD) is the Currency of New Zealand. 54||$41,000|
|United Kingdom ||£24,700 GBP||2004||0. The United Kingdom of Great Britain and Northern Ireland, commonly known as the United Kingdom, the UK or Britain,is a Sovereign state located The Pound Sterling ( symbol £; ISO code: GBP) subdivided into 100 pence (singular penny) is the Currency 632||$39,000|
|Australia||$53,404 AUD||2006||1. For a topic outline on this subject see List of basic Australia topics. The Australian dollar ( sign: $; code: AUD) is the Currency of the Commonwealth of Australia, including Christmas 41||$38,000|
|Israel||₪107,820 ILS||2006||2. For a topic outline on this subject see List of basic Israel topics. The Israeli New Sheqel ( ( sign: ₪; code: ILS) (also spelled unofficially shekel; pl 90||$37,000|
|Ireland||€35,410 EUR||2005||1. Ireland ( Irish: Éire, ˈeːrʲə is a country in north-western Europe. Please update other articles as well to avoid contradiction within Wikipedia e 02||$35,000|
|£21,892 GBP||2005||0. Scotland ( Gaelic: Alba) is a Country in northwest Europethat occupies the northern third of the island of Great Britain. The Pound Sterling ( symbol £; ISO code: GBP) subdivided into 100 pence (singular penny) is the Currency 649||$34,000|
|West Virginia, US||US state||$33,000|
|Hong Kong||$186,000 HKD||2005||5. West Virginia ( is a state in the Appalachian Upland South, and Mid-Atlantic regions of the United States, bordered by Hong Kong ( officially the Hong Kong Special Administrative Region, is a territory located on China 's south coast on the Pearl River Delta, and borders 96||$31,000|
|Singapore||$45,960 SGD||2005||1. Singapore The dollar ( sign: $; code: SGD) is the Currency of Singapore. 55||$30,000|
Achieving real gains in household income can be very difficult. Since 1980, US 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). A recession is a contraction phase of the Business cycle. The U
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. Cost of living is the Cost of maintaining a certain Standard of living. Figure 1 shows how US incomes have changed since 1970. The last recession was the early 2000s recession and was started with the bursting of the dot-com bubble. The Early 2000s Recession was felt in mostly Western countries affecting the European Union mostly during 2000 and 2001 and the United States mostly in The " dot-com bubble " (or sometimes the " IT bubble " was a speculative bubble covering roughly 1995–2001 (with a climax on March 10 It affected most advanced economies including the European Union, Japan and the United States.
Many economists are concerned that another recession may be imminent. In 2008 the possibility of an economic crisis was suggested by several important indicators of economic downturn worldwide The current crisis began with the bursting of the US housing bubble, which caused a problem in the dangerously exposed subprime mortgage market. The United States housing bubble is an Economic bubble in many parts of the United States housing market including areas of California, The subprime mortgage crisis is an ongoing financial crisis characterized by contracted Liquidity in global credit markets and Banking This in turn has triggered a global financial crisis. The term financial crisis is applied broadly to a variety of situations in which some financial institutions or assets suddenly lose a large part of their value American household incomes have only recently recovered from the early 2000s recession (see Figure 1). The Early 2000s Recession was felt in mostly Western countries affecting the European Union mostly during 2000 and 2001 and the United States mostly in The threat of another recession has caused confidence to plunge to record lows, with polls showing that 81% of Americans believe that the United States is heading in the wrong direction . The United States of America —commonly referred to as the
The relationship between economic activity and household income varies substantially from country-to-country. Consider the situation of Equatorial Guinea, a small African oil state with one of the world's highest GDP per capita (US$50,200). The Republic of Equatorial Guinea ( República de Guinea Ecuatorial,) is a country in Central Africa. Equatorial Guinea's GDP per capita is 50% higher than Australia's, yet life expectancy in Equatorial Guinea is less than 50 years and most of their citizen's live in abject poverty, the vast majority subsisting on less than $1 per day.
|Equatorial Guinea||Australia||Iraq (war torn)|
|GDP per capita (PPP)||$50,200||$33,300||$1,900|
|Life expectancy||49. The Republic of Equatorial Guinea ( República de Guinea Ecuatorial,) is a country in Central Africa. For a topic outline on this subject see List of basic Australia topics. For a topic outline on this subject see List of basic Iraq topics. In Economics, an export is any good or Commodity, Transported from one country to another country in a Legitimate fashion Life expectancy is the average number of years of life remaining at a given age 5||80. 6||69. 3|
Equatorial Guinea is corrupt country, which helps explain why the normal people are not benefiting from the oil wealth. Infant mortality is defined as the number of deaths of Infants (one year of age or younger per 1000 live births However this issue isn't just about corruption. A comparison between median household income and GDP per capita for advanced countries is shown in Figure 2. These countries do not have serious corruption problems and yet there is only a weak correlation (R=0. 16) between the two indicators. Showing that even when comparing advanced countries, differences in economic activity do not have a predictable effect on household income.
Source: IMF GDP per capita
There is a common misunderstanding that GDP per capita can be used to predict median household income. For example, Ireland and the United States have a similar GDP per capita, from this people sometimes assume that their household incomes are also similar, when in reality US incomes are much higher when adjustments for purchasing power parity are made. The purchasing power parity ( PPP) theory uses the long-term equilibrium Exchange rate of two currencies to equalize their Purchasing power. The main reason for the disparity is that household consumption only makes up about 43% of Ireland's GDP, whereas household consumption makes up about 67% of America's GDP.
It is also erroneous to use PPP-adjusted household income as the sole metric to compare actual household relative prosperity/buying power across countries. That's because different governments subsidize different services. So, for example, in the US, many individuals are responsible for paying their own medical costs (or premiums) whereas the UK, Canada and other countries provide national health care for free. Some countries also subsidize education differently. So the effective buying power, even of $1 of PPP-adjusted income, is very different. As an example, if both a US household and a Canadian household make $10,000 in PPP-adjusted household income, the median Canadian household is actually better off based on median spending on healthcare in the US (which is absent in Canada since national health care is provided to all citizens for free).
Another misunderstanding is the idea that if the economy is growing (GDP growth) then household incomes are also growing. In reality economic growth doesn't necessarily equate to growth in median household income. For example the US economy grew 8% over the 2000-2006 period but median household income actually fell 2%.
A strong economy with a high GDP per capita is a key requirement to deliver prosperity to the people, but it is not the only requirement. So in a sense GDP per capita is an indirect indicator of prosperity, whereas median household income is a more direct measurement, albeit still inaccurate because of differences in government subsidies of essential services such as health care and education.