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.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."2 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.3
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.
The annual median equivalised disposable household income for selected countries is shown in the table below. This is what a each equivalent adult in a household in the middle of the income distribution earns in a year.
Caution should be made when comparing countries based on a strict ranking, since not all datasets are capturing income equally. Some sources are capturing wages, self employment income, pensions and property income better than others. When compared to national accounts data (adjusted for differences in definition), the datasets capture anywhere between 75 and 95% of the true income.4 More specifically, countries where surveys are used range from around 70 to 85%, while register countries (e.g., the Netherlands, and the Scandinavian nations) are capturing on average more than 90%. The U.S. dataset captures only 75 %of the disposable income aggregate as of 2004. Thus, a true ranking would see a different ranking, as countries with low coverage would move above those with high coverage.
Data are in United States dollars at current prices and current purchasing power parity for private consumption for the reference year.
|Rank||Country||Median income (US$, PPP)||Median income (US$, nominal)||Year5|
Since 1980, U.S. gross domestic product (GDP) per capita has increased 67%,7 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, 2011 American median household income is 1.13% lower than what it was in 1989. This corresponds to a 0.05% annual decrease over a 22-year period.8 In the mean time, GDP per capita has increased by 33.8% or 1.33% annually.9
- List of countries by average wage
- List of U.S. states by 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'?". Retrieved 2011-09-13.
- "U.S. Census Bureau on the nature the median in determining wealth". 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. Retrieved 2006-06-29.
- "OECD Statistics". OECD. Retrieved 2013-05-15.
- DeNavas-Walt, Carmen; Proctor, Bernadette D.; Smith, Jessica C. (September 2012). "Real Median Household Income by Race and Hispanic Origin: 1967 to 2010". Income, Poverty, and Health Insurance Coverage in the United States: 2011. U.S. Census Bureau. p. 8.
- "OECD(2011), Society at a Glance 2011 - OECD Social Indicators". OECD. Retrieved 12 March 2012.
- "World Economic Outlook database October 2007". International Monetary Fund. Retrieved 12 March 2012.