Mean Income Definition

The mean income of a demographic is simply the mean, or arithmetic average, of the individual household incomes of the entire demographic. Mean income data are used by governmental and private organizations to set policy and for operations. As arithmetic means are typically used only with parametric data, they are sometimes considered unsuitable for various applications and in these cases mean data should be replaced by median data. For example, with nearly any large demographic the mean income will be significantly higher than the median income because of the disparate (nonparametric) distribution of wealth across US households. Therefore, policy established using mean incomes will typically favor more wealthy individuals while policy established using median incomes will typically favor poorer individuals.