[The following facts, and the point, come from The Tiger That Isn't by Michael Blastland and Andrew Dilnot. A book every person in the UK should read]
What is the average income in the UK? You’d think everyone would be able to get this right, since it has such a strong bearing on, well almost everything. So, is it £14,000, £18,800 or £23,000? (these are 2005/2006 figures, update: and are the incomes for childless couples – the incomes combined of two people living together). There’s quite a spread there, so you should be able to get the right one.
The answer is… all three of them. Because it depends how you measure averages. The mean – what most people call “average” is £23,000. This is the number you get if you add up all the incomes and divide by the number of them. That’s the most common meaning of average. But the other two kinds are useful too. £18,800 is the income that divides the population in half, the median – half of the people have incomes lower than that, and half have higher. And £14,000 is the mode – the most common income.
A lot of people might be surprised that the most common income is £14,000. To put it in context, that’s just under £1200/month. A salutary thought for some of us, I suspect.
The important thing to note of course isn’t the absolute numbers but the relationship between them. £23,000 is an awful lot more than £14,000, but £23,000 is the one used in a lot of policy judgments. That £23,000 figure is in fact pretty much useless – it’s completely skewed by all the tremendously wealthy people out there. If you are making policy for the majority, the fact there are a few Roman Abramoviches around is actually uninteresting – but their incomes go into that number too.
The small number of wealthy have a tremendous impact on the average – 80% of the world’s population earn less than the average. So what value the average? This isn’t a rant against the wealthy – the reason they can skew the total so far is really because incomes don’t go below zero.
As an example, what is the average number of feet a human being has? Clearly the vast majority of people have two feet. Howevver, some people have only one foot, so the average is less than two – perhaps 1.999 feet. So how about that, almost everyone has more than the average number of feet – we’re rich in feet!
Feet are not something where the mean tells us much – and nor is income.
What is the point of this? Well, I was surprised by the above – very surprised that when the “average income” number is tossed around on TV there’s no thought by those doing the tossing into which average they should use. Most of the people watching who hear the average income is £23k probably think they earn well below average, and so are poor, when in fact most of them are probably, really, average.
If something so fundamental can be interpreted so badly by journalists, then beware any other numbers they use!