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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. [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. [1]

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.

Contents

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 parity (PPP) (obtained from the Organisation for Economic Co-operation and Development).[3 ] Note that PPP-adjusted household income is not reflective of relative buying power (or prosperity) between countries because different governments subsidize different services.

Country Median household income national currency units Year PPP rate (OECD) Median household income (PPP)
Switzerland [4] (gross) 107,748 CHF, $99,482 2007 1.787236 $60,288
California, US [5] 55,450 USD 2007 1.00 $55,450
United States 50,233 USD 2007 1.00 $50,233
Canada [6] 53,634 CAD 2005 1.21 $44,000
Switzerland [4] (after taxes and health insurance) 75,312 CHF, $69,534 2007 1.723465 $43,698
New Zealand [7] 62,556 NZD 2007 1.54 $41,000
United Kingdom [8] 24,700 GBP 2004 0.632 $39,000
Australia[9 ] 53,404 AUD 2006 1.41 $38,000
Israel[10 ] 107,820 ILS 2006 2.90 $37,000
Ireland 35,410 EUR 2005 1.02 $35,000
Scotland,
United Kingdom[11 ]
21,892 GBP 2005 0.649 $34,000
West Virginia, US [12] US state $33,000
Hong Kong [13] 186,000 HKD 2005 5.96 $31,000
Singapore [14] 45,960 SGD 2005 1.55 $30,000

Median household income and the economy

Since 1980, U.S. 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).

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 subprime mortgage market. This in turn has triggered a global financial crisis. American household incomes have only recently recovered from the early 2000s recession (see Figure 1).

US real median household income 1967 - 2008.png

The relationship between economic activity (as measured by GDP) 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 (USD$50,200). Equatorial Guinea's GDP per capita is 50% higher than Australia's, yet life expectancy in Equatorial Guinea is less than 50 years and 47% of citizens live in poverty.[15]

Equatorial Guinea Australia Iraq (war torn)
GDP per capita (PPP) $50,200 $33,300 $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 household income.[16]

International Median Household Income.png

See also

References

  1. ^ a b "US Government, the different between =2006-06-29". http://www.business.gov/topics/research_resources/market_research/census_bureau_faq.html.  
  2. ^ "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.  
  3. ^ "OECD, PPP conversion rates". http://www.oecd.org/dataoecd/61/56/1876133.xls. Retrieved 2006-01-20.  
  4. ^ a b "Household income and expenditure 2007". http://www.bfs.admin.ch/bfs/portal/en/index/themen/20/02/blank/key/einkommen0/niveau.html. Retrieved 2009-07-13.  
  5. ^ "California Median Household income, 2007". http://www.dof.ca.gov/HTML/FS_DATA/LatestEconData/documents/BBMEDIAN.XLS. Retrieved 2009-06-05.  
  6. ^ "Canada median household income". http://www12.statcan.ca/english/census06/data/topics/RetrieveProductTable.cfm?ALEVEL=3&APATH=3&CATNO=97-563-XCB2006045&DETAIL=0&DIM=&DS=99&FL=0&FREE=0&GAL=0&GC=99&GK=NA&GRP=1&IPS=97-563-XCB2006045&METH=0&ORDER=1&PID=94592&PTYPE=88971&RL=0&S=1&ShowAll=No&StartRow=1&SUB=0&Temporal=2006&Theme=81&VID=0&VNAMEE=&VNAMEF=. Retrieved 2008-5-2.  
  7. ^ "New Zealand income survey showing median household income". http://www.stats.govt.nz/products-and-services/hot-off-the-press/nz-income-survey/new-zealand-income-survey-jun-07-qtr-hotp.htm?page=para002Master. Retrieved 2007-10-04.  
  8. ^ "UK parliament discussion showing median household income". http://www.parliament.the-stationery-office.co.uk/pa/cm200506/cmhansrd/cm060719/text/60719w1831.htm. Retrieved 2006-12-31.  
  9. ^ "Census QuickStats". http://www.censusdata.abs.gov.au/ABSNavigation/prenav/ViewData?action=402&documentproductno=SSC12037&documenttype=Main%20Features&order=1&tabname=Summary&areacode=SSC12037&issue=2006&producttype=QuickStats&javascript=true&textversion=false&navmapdisplayed=true&breadcrumb=LPD&&collection=Census&period=2006&producttype=QuickStats&-. Retrieved 2007-10-07.  
  10. ^ "israeli median household income, 2006". http://www1.cbs.gov.il/www/publications/households06/pdf/t03_1.pdf. Retrieved 2008-01-15.  
  11. ^ "Scottish Economic Statistics 2007". http://www.scotland.gov.uk/Publications/2007/07/18083820/71. Retrieved 2007-10-09.  
  12. ^ "West Virginia, Median Household Income, 2005". http://www.census.gov/hhes/www/income/income04/statemhi.html. Retrieved 2007-03-22.  
  13. ^ "Hong Kong median household income, 2005". http://www.adb.org/Documents/Books/ADO/2005/hkg.asp. Retrieved 2007-01-19.  
  14. ^ "Singapore median household income, 2005". http://www.singstat.gov.sg/keystats/annual/ghs/r2/chap3.pdf. Retrieved 2007-01-19.  
  15. ^ Population below poverty line (most recent) by country, Nationmaster
  16. ^ IMF GDP per capita

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