Median household income
Encyclopedia
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 household
s 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:
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.
(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.
Data are in United States dollar
s at current prices and current PPP
s for the reference year.
(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.
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.
Household
The household is "the basic residential unit in which economic production, consumption, inheritance, child rearing, and shelter are organized and carried out"; [the household] "may or may not be synonymous with family"....
s earning less than the median
Median
In probability theory and statistics, a median is described as the numerical value separating the higher half of a sample, a population, or a probability distribution, from the lower half. The median of a finite list of numbers can be found by arranging all the observations from lowest value to...
household income and the other half earning more. The median income is considered by many statisticians to be a better indicator than the average
Average
In mathematics, an average, or central tendency of a data set is a measure of the "middle" value of the data set. Average is one form of central tendency. Not all central tendencies should be considered definitions of 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:
Household income is not to be confused with family or personal income
Personal income in the United States
Personal income is an individual’s total earnings from wages, investment interest, and other sources. In the United States the most widely cited personal income statistics are the Bureau of Economic Analysis’s personal income and the Census Bureau’s per capita money 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.
International statistics
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 parityPurchasing power parity
In economics, purchasing power parity is a condition between countries where an amount of money has the same purchasing power in different countries. The prices of the goods between the countries would only reflect the exchange rates...
(PPP) (obtained from the Organisation for Economic Co-operation and Development
Organisation for Economic Co-operation and Development
The Organisation for Economic Co-operation and Development is an international economic organisation of 34 countries founded in 1961 to stimulate economic progress and world trade...
).
This is what each equivalent adult
Equivalisation
Equivalisation is a technique in economics in which members of a household receive different weightings. Total household income is then divided by the sum of the weightings to yield a representative income.The OECD uses the following weightings:...
in a household in the middle of the income distribution earns in a year.
Data are in United States dollar
United States dollar
The United States dollar , also referred to as the American dollar, is the official currency of the United States of America. It is divided into 100 smaller units called cents or pennies....
s at current prices and current PPP
Purchasing power parity
In economics, purchasing power parity is a condition between countries where an amount of money has the same purchasing power in different countries. The prices of the goods between the countries would only reflect the exchange rates...
s for the reference 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 |  Republic of 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 |  Early Modern 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 | 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 productGross domestic product
Gross domestic product refers to the market value of all final goods and services produced within a country in a given period. GDP per capita is often considered an indicator of a country's standard of living....
(GDP) per capita has increased 67%, while median household income has only increased by 15%. An economic recession
Recession
In economics, a recession is a business cycle contraction, a general slowdown in economic activity. During recessions, many macroeconomic indicators vary in a similar way...
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
Early 2000s recession
The early 2000s recession was a decline in economic activity which occurred mainly in developed countries. The recession affected the European Union mostly during 2000 and 2001 and the United States mostly in 2002 and 2003. The UK, Canada and Australia avoided the recession for the most part, while...
and was started with the bursting of the dot-com bubble
Dot-com bubble
The dot-com bubble was a speculative bubble covering roughly 1995–2000 during which stock markets in industrialized nations saw their equity value rise rapidly from growth in the more...
. 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
United States housing bubble
The United States housing bubble is an economic bubble affecting many parts of the United States housing market in over half of American states. Housing prices peaked in early 2006, started to decline in 2006 and 2007, and may not yet have hit bottom as of 2011. On December 30, 2008 the...
, which caused a problem in the dangerously exposed sub prime-mortgage market. This in turn has triggered a global financial crisis
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. In the 19th and early 20th centuries, many financial crises were associated with banking panics, and many recessions coincided with these...
.
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 Equatorial Guinea Equatorial Guinea, officially the Republic of Equatorial Guinea where the capital Malabo is situated.Annobón is the southernmost island of Equatorial Guinea and is situated just south of the equator. Bioko island is the northernmost point of Equatorial Guinea. Between the two islands and to the... |
Australia Australia Australia , officially the Commonwealth of Australia, is a country in the Southern Hemisphere comprising the mainland of the Australian continent, the island of Tasmania, and numerous smaller islands in the Indian and Pacific Oceans. It is the world's sixth-largest country by total area... |
Iraq Iraq Iraq ; officially the Republic of Iraq is a country in Western Asia spanning most of the northwestern end of the Zagros mountain range, the eastern part of the Syrian Desert and the northern part of the Arabian Desert.... (war torn) |
|
|---|---|---|---|
| GDP per capita (PPP) | $31,837 (2009) | $39,231 (2009) | $1,900 |
| Biggest export Export The term export is derived from the conceptual meaning as to ship the goods and services out of the port of a country. The seller of such goods and services is referred to as an "exporter" who is based in the country of export whereas the overseas based buyer is referred to as an "importer"... |
Oil | Coal | Oil |
| Life expectancy Life expectancy Life expectancy is the expected number of years of life remaining at a given age. It is denoted by ex, which means the average number of subsequent years of life for someone now aged x, according to a particular mortality experience... |
49.5 | 80.6 | 69.3 |
| Infant mortality Infant mortality Infant mortality is defined as the number of infant deaths per 1000 live births. Traditionally, the most common cause worldwide was dehydration from diarrhea. However, the spreading information about Oral Re-hydration Solution to mothers around the world has decreased the rate of children dying... |
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.
See also
- Mean household income
- Income distributionIncome distributionIn economics, income distribution is how a nation’s total economy is distributed amongst its population.Income distribution has always been a central concern of economic theory and economic policy...
- Income quintiles
- Household income in the United StatesHousehold income in the United StatesHousehold income is a measure commonly used by the United States government and private institutions, that counts the income of all residents over the age of 18 in each household, including not only all wages and salaries, but such items as unemployment insurance, disability payments, child support...
- International Ranking of Household Income
- MedianMedianIn probability theory and statistics, a median is described as the numerical value separating the higher half of a sample, a population, or a probability distribution, from the lower half. The median of a finite list of numbers can be found by arranging all the observations from lowest value to...
- Median household income in Australia and New ZealandMedian household income in Australia and New ZealandMedian household income is commonly used to measure the relative prosperity of populations in different geographical locations. It 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.Since 2000...
- Median income per household memberMedian income per household memberThe median income per member of household is a measure used by statisticians and the US Census Bureau to determine the median income that exists in a household for each of its members. In order to obtain this number the median household income is divided by the median number of persons in...
- Places in the United States with notable demographic characteristicsPlaces in the United States with notable demographic characteristicsThe following is a collection of data for places with unusual or otherwise notable demographic characteristics within the United States. The data was obtained by the U.S...
- Poverty in the United StatesPoverty in the United StatesPoverty is defined as the state of one who lacks a usual or socially acceptable amount of money or material possessions. According to the U.S. Census Bureau data released Tuesday September 13th, 2011, the nation's poverty rate rose to 15.1% in 2010, up from 14.3% in 2009 and to its highest level...