Definition of Mean Household Income
What does the term "mean household income" mean? What is the definition of the term "mean household income"?
"Mean household income" is derived by adding the total income of all US households and dividing by the total number of US households.
For instance, "mean household income" in 2011 was $69,677. This means that the average US household made $69,677 in 2011.
The problem with "mean household income" is that very high income households can skew the averages higher.
For instance - if hedge fund manager John Paulson makes $4 billion in one year, then his income alone will skew the average higher.
For this reason, "median household income" is more frequently used.
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