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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 [1] 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 "[2]

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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.
-US Census Bureau, Frequently Asked Question, published by First Gov. "[1]

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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.

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International statistics

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. [3] 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).

CountryMedian household income national currency unitsYearPPP rate (OECD)Median household income (PPP)
Switzerland[4]95,184 CHF20051. 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[5]US State$54,000
United States$48,000 USD20061. 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 [6]$53,634 CAD20051. Country to "Dominion of Canada" or "Canadian Federation" or anything else please read the Talk Page 21$44,000
New Zealand [7]$62,556 NZD20071. 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 [8]£24,700 GBP20040. 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[9]$53,404 AUD20061. 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[10]₪107,820 ILS20062. 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 EUR20051. 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
Scotland,
United Kingdom[11]		£21,892 GBP20050. 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[12]US state$33,000
Hong Kong[13]$186,000 HKD20055. 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[14]$45,960 SGD20051. Singapore The dollar ( sign: $; code: SGD) is the Currency of Singapore. 55$30,000

Median household income and the economy

Achieving real gains in household income can be very difficult. Since 1980, US gross domestic product (GDP) per capita has increased 67%[1], 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 [2]. 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 GuineaAustraliaIraq (war torn)
GDP per capita (PPP)$50,200$33,300$1,900
Biggest exportOilCoalOil
Life expectancy49. 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 580. 669. 3
Infant mortality87547

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.

Figure 2

Image:International Median Household Income.png

Source: IMF GDP per capita[3]

Common misunderstandings

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[4].

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.

See also

References

  1. ^ a b US Government, the different between =2006-06-29. Household income is a measure of current private income commonly used by the United States government and private institutions Highlights Most people (90% live in a state where the median household income is US$38000 Household income is a measure of current private income commonly used by the United States government and private institutions The most common measure of Poverty in the United States is the " poverty line " set by the U Income inequality metrics or income distribution metrics are techniques used by economists to measure the distribution of Income and Economic inequality 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
  2. ^ US Census Bureau on the nature the median in determining wealth. Retrieved on 2006-06-29. Year 2006 ( MMVI) was a Common year starting on Sunday of the Gregorian calendar. Events 512 - A Solar eclipse is recorded by a monastic chronicler in Ireland.
  3. ^ OECD, PPP conversion rates. Retrieved on 2006-01-20. Year 2006 ( MMVI) was a Common year starting on Sunday of the Gregorian calendar. Events 250 - Emperor Decius begins a widespread persecution of Christians in Rome.
  4. ^ Swiss Government, income quintiles, 2005. Retrieved on 2007-01-19. Year 2007 ( MMVII) was a Common year starting on Monday of the Gregorian calendar in the 21st century. Events 1419 - Hundred Years' War: Rouen surrenders to Henry V of England completing his reconquest of Normandy.
  5. ^ California Median Household income, 2006. Retrieved on 2007-03-22. Year 2007 ( MMVII) was a Common year starting on Monday of the Gregorian calendar in the 21st century. Events 238 - Gordian I and his son Gordian II are proclaimed Roman emperor.
  6. ^ Canada median household income. Retrieved on 2008-5-2.
  7. ^ New Zealand income survey showing median household income. Retrieved on 2007-10-04. Year 2007 ( MMVII) was a Common year starting on Monday of the Gregorian calendar in the 21st century. Events 610 - Heraclius arrives by ship from Africa at Constantinople, overthrows Byzantine Emperor Phocas
  8. ^ UK parliament discussion showing median household income. Retrieved on 2006-12-31. Year 2006 ( MMVI) was a Common year starting on Sunday of the Gregorian calendar. Events 406 – Vandals, Alans and Suebians cross the Rhine, beginning an invasion of Gallia.
  9. ^ Census QuickStats. Retrieved on 2007-10-07. Year 2007 ( MMVII) was a Common year starting on Monday of the Gregorian calendar in the 21st century. Events 3761 BC - The epoch (origin of the modern Hebrew calendar ( Proleptic Julian calendar)
  10. ^ israeli median household income, 2006. Retrieved on 2008-01-15. 2008 ( MMVIII) is the current year in accordance with the Gregorian calendar, a Leap year that started on Tuesday of the Common Events 588 BC - Nebuchadrezzar II of Babylon lays siege to Jerusalem under Zedekiah 's reign
  11. ^ Scottish Economic Statistics 2007. Retrieved on 2007-10-09. Year 2007 ( MMVII) was a Common year starting on Monday of the Gregorian calendar in the 21st century. Events 768 - Carloman I and Charlemagne are crowned Kings of The Franks.
  12. ^ West Virginia, Median Household Income, 2005. Retrieved on 2007-03-22. Year 2007 ( MMVII) was a Common year starting on Monday of the Gregorian calendar in the 21st century. Events 238 - Gordian I and his son Gordian II are proclaimed Roman emperor.
  13. ^ Hong Kong median household income, 2005. Retrieved on 2007-01-19. Year 2007 ( MMVII) was a Common year starting on Monday of the Gregorian calendar in the 21st century. Events 1419 - Hundred Years' War: Rouen surrenders to Henry V of England completing his reconquest of Normandy.
  14. ^ Singapore median household income, 2005. Retrieved on 2007-01-19. Year 2007 ( MMVII) was a Common year starting on Monday of the Gregorian calendar in the 21st century. Events 1419 - Hundred Years' War: Rouen surrenders to Henry V of England completing his reconquest of Normandy.

Related links

The following is a collection of data for places with unusual or otherwise notable demographic characteristics within the United States
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