Household income
Encyclopedia
Household income is a measure of the combined incomes of all people sharing a particular household
or place of residence. It includes every form of income, e.g., salaries and wages, retirement income, near cash government transfers like food stamps, and investment
gains.
Average household income can be used as an indicator for the monetary well-being of a country's citizens. Mean
or median
net household income, after taxes and mandatory contributions, are good indicators of standard of living
, because they include only disposable income
and acknowledge people sharing accommodation
benefit from pooling at least some of their living costs.
Average household incomes need not map directly to measures of an individual's earnings such as per capita income
as numbers of people sharing households and numbers of income earners per household can vary significantly between regions and over time.
(LIS) has recently added a publicly available database with comparable statistics on household incomes for several countries, as has the OECD. These are the sources used.
Below are presented the mean and median disposable household incomes, adjusted for differences in household size. Thus, the figures presented are per person (equivalized) and after all income taxes and social contributions are paid. All figures were converted using respective year purchasing power parities
(PPP) for private consumption, which is recommended when comparing incomes internationally. The PPP conversion rates are taken directly from the OECD database. All incomes are in the prices when income was earned, and refer to year 2004, except for Australia (2003), UK (2004–2005), and Sweden (2005). The exact definition of income can be seen in the LIS website (variable DPI). Generally, it includes all cash income (e.g., earnings, pensions, interests, dividends, rental income, social transfers) and excludes most non-cash income (e.g., employer contributions to social insurances, governmental health care, education). Note that capital gains are excluded from the income definition.
Caution should be made when comparing countries based on a strict ranking, since not all datasets are capturing income equally. For instance, income spent on private health insurance, which makes up a substantial expense in many American households, is counted as disposable; however after tax, many Canadian households spend relatively little on healthcare. When compared to national accounts data (adjusted for differences in definition), the datasets capture anywhere between 75 and 95% of the true income. More specifically, countries where surveys are used range from around 70 to 85%, while register countries (e.g., the Netherlands) 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.
household income divides households in a country or region into two equal segments with the first half of household
s earning less than the median household income and the other half earning more. It is considered by many statisticians to be a better indicator than the mean
household income as it is not dramatically affected by unusually high or low values."
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"....
or place of residence. It includes every form of income, e.g., salaries and wages, retirement income, near cash government transfers like food stamps, and investment
Investment
Investment has different meanings in finance and economics. Finance investment is putting money into something with the expectation of gain, that upon thorough analysis, has a high degree of security for the principal amount, as well as security of return, within an expected period of time...
gains.
Average household income can be used as an indicator for the monetary well-being of a country's citizens. Mean
Mean
In statistics, mean has two related meanings:* the arithmetic mean .* the expected value of a random variable, which is also called the population mean....
or 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...
net household income, after taxes and mandatory contributions, are good indicators of standard of living
Standard of living
Standard of living is generally measured by standards such as real income per person and poverty rate. Other measures such as access and quality of health care, income growth inequality and educational standards are also used. Examples are access to certain goods , or measures of health such as...
, because they include only disposable income
Disposable income
Disposable income is total personal income minus personal current taxes. In national accounts definitions, personal income, minus personal current taxes equals disposable personal income...
and acknowledge people sharing accommodation
Accommodation
Accommodation may refer to:* A dwelling* A place of temporary lodging* Accommodation , a theological principle linked to divine revelation within the Christian church* Accommodation , a term used in United States contract law...
benefit from pooling at least some of their living costs.
Average household incomes need not map directly to measures of an individual's earnings such as per capita income
Per capita income
Per capita income or income per person is a measure of mean income within an economic aggregate, such as a country or city. It is calculated by taking a measure of all sources of income in the aggregate and dividing it by the total population...
as numbers of people sharing households and numbers of income earners per household can vary significantly between regions and over time.
International Comparison
Internationally comparable data on household income are difficult to find. Definitions differ frequently, as does the treatment of taxes (i.e., gross versus net income). Fortunately, the Luxembourg Income StudyLuxembourg Income Study
The Luxembourg Income Study, asbl is a non-profit project which produces a cross-national database of micro-economic income data for social science research. The project started in 1983 and is headquartered in Luxembourg. In 2006 the database included data from 30 countries on four continents,...
(LIS) has recently added a publicly available database with comparable statistics on household incomes for several countries, as has the OECD. These are the sources used.
Below are presented the mean and median disposable household incomes, adjusted for differences in household size. Thus, the figures presented are per person (equivalized) and after all income taxes and social contributions are paid. All figures were converted using respective year purchasing power parities
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...
(PPP) for private consumption, which is recommended when comparing incomes internationally. The PPP conversion rates are taken directly from the OECD database. All incomes are in the prices when income was earned, and refer to year 2004, except for Australia (2003), UK (2004–2005), and Sweden (2005). The exact definition of income can be seen in the LIS website (variable DPI). Generally, it includes all cash income (e.g., earnings, pensions, interests, dividends, rental income, social transfers) and excludes most non-cash income (e.g., employer contributions to social insurances, governmental health care, education). Note that capital gains are excluded from the income definition.
Caution should be made when comparing countries based on a strict ranking, since not all datasets are capturing income equally. For instance, income spent on private health insurance, which makes up a substantial expense in many American households, is counted as disposable; however after tax, many Canadian households spend relatively little on healthcare. When compared to national accounts data (adjusted for differences in definition), the datasets capture anywhere between 75 and 95% of the true income. More specifically, countries where surveys are used range from around 70 to 85%, while register countries (e.g., the Netherlands) 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.
Mean equivalized disposable household income (PPP) $
| Rank | Country | Currency in 2004 | PPP rate 2004 | Mean Income (PPP) | |
|---|---|---|---|---|---|
| 1 |  United States |
32,195 | 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.... |
1 | 32,195 |
| 2 |  Canada |
33,785 | Canadian Dollar Canadian dollar The Canadian dollar is the currency of Canada. As of 2007, the Canadian dollar is the 7th most traded currency in the world. It is abbreviated with the dollar sign $, or C$ to distinguish it from other dollar-denominated currencies... |
1.27 | 26,602 |
| 3 |  Switzerland |
49,844 | Swiss Franc Swiss franc The franc is the currency and legal tender of Switzerland and Liechtenstein; it is also legal tender in the Italian exclave Campione d'Italia. Although not formally legal tender in the German exclave Büsingen , it is in wide daily use there... |
1.88 | 26,512 |
| 4 |  United Kingdom |
16,685 | British Pound | 0.64 | 26,070 |
| 5 |  Norway |
254,243 | Norwegian krone Norwegian krone The krone is the currency of Norway and its dependent territories. The plural form is kroner . It is subdivided into 100 øre. The ISO 4217 code is NOK, although the common local abbreviation is kr. The name translates into English as "crown"... |
9.8 | 25,943 |
| 6 |  Austria |
22,527 | Euro Euro The euro is the official currency of the eurozone: 17 of the 27 member states of the European Union. It is also the currency used by the Institutions of the European Union. The eurozone consists of Austria, Belgium, Cyprus, Estonia, Finland, France, Germany, Greece, Ireland, Italy, Luxembourg,... |
0.89 | 25,311 |
| 7 |  Germany |
20,901 | Euro Euro The euro is the official currency of the eurozone: 17 of the 27 member states of the European Union. It is also the currency used by the Institutions of the European Union. The eurozone consists of Austria, Belgium, Cyprus, Estonia, Finland, France, Germany, Greece, Ireland, Italy, Luxembourg,... |
0.91 | 22,968 |
| 8 |  Denmark |
202,275 | Danish Krone Danish krone The krone is the official currency of the Kingdom of Denmark consisting of Denmark, the Faroe Islands and Greenland. It is subdivided into 100 øre... |
9.0 | 22,475 |
| 9 |  Netherlands |
20,607 | Euro Euro The euro is the official currency of the eurozone: 17 of the 27 member states of the European Union. It is also the currency used by the Institutions of the European Union. The eurozone consists of Austria, Belgium, Cyprus, Estonia, Finland, France, Germany, Greece, Ireland, Italy, Luxembourg,... |
0.92 | 22,398 |
| 10 |  Sweden |
203,460 | Swedish Krona Swedish krona The krona has been the currency of Sweden since 1873. Both the ISO code "SEK" and currency sign "kr" are in common use; the former precedes or follows the value, the latter usually follows it, but especially in the past, it sometimes preceded the value... |
9.6 | 21,193 |
| 11 |  Belgium |
19,563 | Euro Euro The euro is the official currency of the eurozone: 17 of the 27 member states of the European Union. It is also the currency used by the Institutions of the European Union. The eurozone consists of Austria, Belgium, Cyprus, Estonia, Finland, France, Germany, Greece, Ireland, Italy, Luxembourg,... |
0.924 | 21,173 |
| 12 |  South Korea |
18,587,000 | Won Won Won or WON may refer to:*The Korean won from 1902–1910:**South Korean won, the currency of the Republic of Korea**North Korean won, the currency of the Democratic People's Republic of Korea* Won , the Korean form of Yuan... |
886.2 | 20,937 |
| 13 |  Early Modern France |
19,547 | Euro Euro The euro is the official currency of the eurozone: 17 of the 27 member states of the European Union. It is also the currency used by the Institutions of the European Union. The eurozone consists of Austria, Belgium, Cyprus, Estonia, Finland, France, Germany, Greece, Ireland, Italy, Luxembourg,... |
0.952 | 20,532 |
| 14 |  Australia |
29,417 | Australian Dollar Australian dollar The Australian dollar is the currency of the Commonwealth of Australia, including Christmas Island, Cocos Islands, and Norfolk Island, as well as the independent Pacific Island states of Kiribati, Nauru and Tuvalu... |
1.44 | 20,428 |
| 15 |  Japan |
2,986,594 | Yen | 150.8 | 19,805 |
| 16 |  Spain |
14,003 | Euro Euro The euro is the official currency of the eurozone: 17 of the 27 member states of the European Union. It is also the currency used by the Institutions of the European Union. The eurozone consists of Austria, Belgium, Cyprus, Estonia, Finland, France, Germany, Greece, Ireland, Italy, Luxembourg,... |
0.788 | 17,770 |
| 17 |  Italy |
15,835 | Euro Euro The euro is the official currency of the eurozone: 17 of the 27 member states of the European Union. It is also the currency used by the Institutions of the European Union. The eurozone consists of Austria, Belgium, Cyprus, Estonia, Finland, France, Germany, Greece, Ireland, Italy, Luxembourg,... |
0.91 | 17,401 |
| 18 |  Poland |
14,844 | Polish złoty | 2.08 | 7,136 |
Median equivalized disposable household income (PPP) $
MedianMedian
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 divides households in a country or region into two equal segments with the first half of household
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 household income and the other half earning more. It is considered by many statisticians to be a better indicator than the mean
Mean
In statistics, mean has two related meanings:* the arithmetic mean .* the expected value of a random variable, which is also called the population mean....
household income as it is not dramatically affected by unusually high or low values."
| Rank | Country | Currency in 2004 | PPP rate | Median Income (PPP) | |
|---|---|---|---|---|---|
| 1 | United States |
26,672 | 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.... |
1 | 26,672 |
| 2 | Switzerland |
45,050 | Swiss Franc Swiss franc The franc is the currency and legal tender of Switzerland and Liechtenstein; it is also legal tender in the Italian exclave Campione d'Italia. Although not formally legal tender in the German exclave Büsingen , it is in wide daily use there... |
1.88 | 23,962 |
| 3 | Norway |
233,186 | Norwegian Krone Norwegian krone The krone is the currency of Norway and its dependent territories. The plural form is kroner . It is subdivided into 100 øre. The ISO 4217 code is NOK, although the common local abbreviation is kr. The name translates into English as "crown"... |
9.8 | 23,794 |
| 4 | Canada |
29,394 | Canadian Dollar Canadian dollar The Canadian dollar is the currency of Canada. As of 2007, the Canadian dollar is the 7th most traded currency in the world. It is abbreviated with the dollar sign $, or C$ to distinguish it from other dollar-denominated currencies... |
1.27 | 23,144 |
| 5 | Austria |
20,134 | Euro Euro The euro is the official currency of the eurozone: 17 of the 27 member states of the European Union. It is also the currency used by the Institutions of the European Union. The eurozone consists of Austria, Belgium, Cyprus, Estonia, Finland, France, Germany, Greece, Ireland, Italy, Luxembourg,... |
0.89 | 22,622 |
| 6 | Denmark |
192,937 | Danish krone Danish krone The krone is the official currency of the Kingdom of Denmark consisting of Denmark, the Faroe Islands and Greenland. It is subdivided into 100 øre... |
9.0 | 21,437 |
| 7 | United Kingdom |
13,637 | British Pound | 0.637 | 21,408 |
| 8 | Netherlands |
18,507 | Euro Euro The euro is the official currency of the eurozone: 17 of the 27 member states of the European Union. It is also the currency used by the Institutions of the European Union. The eurozone consists of Austria, Belgium, Cyprus, Estonia, Finland, France, Germany, Greece, Ireland, Italy, Luxembourg,... |
0.91 | 20,337 |
| 9 | Germany |
18,507 | Euro Euro The euro is the official currency of the eurozone: 17 of the 27 member states of the European Union. It is also the currency used by the Institutions of the European Union. The eurozone consists of Austria, Belgium, Cyprus, Estonia, Finland, France, Germany, Greece, Ireland, Italy, Luxembourg,... |
0.91 | 20,337 |
| 10 | Sweden |
189,475 | Swedish Krona Swedish krona The krona has been the currency of Sweden since 1873. Both the ISO code "SEK" and currency sign "kr" are in common use; the former precedes or follows the value, the latter usually follows it, but especially in the past, it sometimes preceded the value... |
9.6 | 19,736 |
| 11 | Belgium |
17,818 | Euro Euro The euro is the official currency of the eurozone: 17 of the 27 member states of the European Union. It is also the currency used by the Institutions of the European Union. The eurozone consists of Austria, Belgium, Cyprus, Estonia, Finland, France, Germany, Greece, Ireland, Italy, Luxembourg,... |
0.924 | 19,284 |
| 12 | South Korea |
16,665,877 | Won Won Won or WON may refer to:*The Korean won from 1902–1910:**South Korean won, the currency of the Republic of Korea**North Korean won, the currency of the Democratic People's Republic of Korea* Won , the Korean form of Yuan... |
886.2 | 18,806 |
| 13 | Early Modern France |
17,120 | Euro Euro The euro is the official currency of the eurozone: 17 of the 27 member states of the European Union. It is also the currency used by the Institutions of the European Union. The eurozone consists of Austria, Belgium, Cyprus, Estonia, Finland, France, Germany, Greece, Ireland, Italy, Luxembourg,... |
0.952 | 17,984 |
| 14 | Australia |
25,581 | Australian Dollar Australian dollar The Australian dollar is the currency of the Commonwealth of Australia, including Christmas Island, Cocos Islands, and Norfolk Island, as well as the independent Pacific Island states of Kiribati, Nauru and Tuvalu... |
1.44 | 17,764 |
| 15 | Japan |
2,644,730 | Yen | 150.8 | 17,538 |
| 16 | Spain |
12,319 | Euro Euro The euro is the official currency of the eurozone: 17 of the 27 member states of the European Union. It is also the currency used by the Institutions of the European Union. The eurozone consists of Austria, Belgium, Cyprus, Estonia, Finland, France, Germany, Greece, Ireland, Italy, Luxembourg,... |
0.788 | 15,633 |
| 17 | Italy |
13,367 | Euro Euro The euro is the official currency of the eurozone: 17 of the 27 member states of the European Union. It is also the currency used by the Institutions of the European Union. The eurozone consists of Austria, Belgium, Cyprus, Estonia, Finland, France, Germany, Greece, Ireland, Italy, Luxembourg,... |
0.91 | 14,689 |
| 18 | Poland |
12,697 | Polish złoty | 2.08 | 6,104 |