Dear readers, I read that the median monthly household income for 2024 is $11,297.
To me, this monthly household income figure seems to reflect the growing wealth of Singaporeans here.
I am also aware that the above figure is a median rather than a mean (or average) monthly household income.
I asked ChatGpt on whether one should use median monthly household income rather than mean, and the below are the replies.
Using median household income is often considered better than using mean household income when assessing economic conditions, especially for the following reasons:
- Sensitivity to Outliers: The mean (average) can be heavily influenced by extremely high or low incomes. For example, a few very wealthy households can significantly raise the average, giving a misleading picture of the overall income distribution. The median, which is the middle value when all incomes are sorted, is not affected by outliers and provides a better representation of what a typical household earns.
- Income Distribution: Median income reflects the income of the household in the middle of the distribution, which can be more representative of the general population. In contrast, the mean might suggest a higher level of income than what most households experience.
- Understanding Inequality: Median income can provide clearer insights into income inequality within a population. A large gap between median and mean income indicates a high level of income inequality, while a smaller gap suggests a more equal distribution.
- Policy Making: Policymakers often use median income to identify and address economic issues affecting the majority of households. It can be more useful in determining poverty levels and assessing the effectiveness of social programs.
ChatGpt concluded that while both metrics have their uses, median household income is generally more reliable for understanding the economic well-being of a typical household and the overall income distribution.