Household income

Household income

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.


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 Study (LIS) has recently added a publicly available database with comparable statistics on household incomes for several countries, as has the OECD.[1] These are the sources used.

Below are presented the mean and median disposable household incomes, adjusted for differences in household size.[2] 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.[3] 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.[clarification needed]

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[clarification needed] 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 NCU[4][not in citation given] Currency in 2004[5] PPP rate 2004[6] Mean Income (PPP)
1  United States 32,195 United States Dollar 1 32,195
2  Canada 33,785 Canadian Dollar 1.27 26,602
3  Switzerland 49,844 Swiss Franc 1.88 26,512
4  United Kingdom 16,685 British Pound 0.64 26,070
5  Norway 254,243 Norwegian krone 9.8 25,943
6  Austria 22,527 Euro 0.89 25,311
7  Germany 20,901 Euro 0.91 22,968
8  Denmark 202,275 Danish Krone 9.0 22,475
9  Netherlands 20,607 Euro 0.92 22,398
10  Sweden 203,460 Swedish Krona 9.6 21,193
11  Belgium 19,563 Euro 0.924 21,173
12  South Korea 18,587,000 Won 886.2 20,937
13  France 19,547 Euro 0.952 20,532
14  Australia 29,417 Australian Dollar 1.44 20,428
15  Japan 2,986,594 Yen 150.8 19,805
16  Spain 14,003 Euro 0.788 17,770
17  Italy 15,835 Euro 0.91 17,401
18  Poland 14,844 Polish złoty 2.08 7,136

Median equivalized disposable household income (PPP) $

Median household income divides households in a country or region into two equal segments with the first half of households 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."[7]

Rank Country NCU[8][not in citation given] Currency in 2004[9] PPP rate[6] Median Income (PPP)
1  United States 26,672 United States Dollar 1 26,672
2  Switzerland 45,050 Swiss Franc 1.88 23,962
3  Norway 233,186 Norwegian Krone 9.8 23,794
4  Canada 29,394 Canadian Dollar 1.27 23,144
5  Austria 20,134 Euro 0.89 22,622
6  Denmark 192,937 Danish krone 9.0 21,437
7  United Kingdom 13,637 British Pound 0.637 21,408
8  Netherlands 18,507 Euro 0.91 20,337
9  Germany 18,507 Euro 0.91 20,337
10  Sweden 189,475 Swedish Krona 9.6 19,736
11  Belgium 17,818 Euro 0.924 19,284
12  South Korea 16,665,877 Won 886.2 18,806
13  France 17,120 Euro 0.952 17,984
14  Australia 25,581 Australian Dollar 1.44 17,764
15  Japan 2,644,730 Yen 150.8 17,538
16  Spain 12,319 Euro 0.788 15,633
17  Italy 13,367 Euro 0.91 14,689
18  Poland 12,697 Polish złoty 2.08 6,104

See also

  • List of countries by average wage
  • Compensation of employees (per hour)


  1. ^
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  3. ^
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  6. ^ a b "PPPs and exchange rates". From the drop down menu select PPPs for private consumption. OECD stat extracts. Retrieved 13 May 2011. 
  7. ^ "U.S. Census Bureau on the nature the median in determining wealth". Retrieved 2006-06-29. 
  8. ^
  9. ^

External links

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