Median and mean income analyses ‐ Their implications for material living standards and national well‐being

Blessing Chiripanhura ()

Economic & Labour Market Review, 2011, vol. 5, issue 2, 45-63

Abstract: SummaryThis paper argues that median income analysis should be used to complement mean income analysis because median analysis gives a better indication of the level of economic well‐being of the ‘typical’ household. Since the income distribution is positively skewed, mean analysis is influenced by extreme observations at the top end of the distribution, resulting in the mean exceeding the median. The paper shows that micro (household) data gives a better indication of national economic well‐being than macro (National Accounts) data. It argues that final household income may be a preferable income variable for assessing material well‐being because it includes all earned income and benefits paid in kind.

Date: 2011
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