bensozia: Getting Richer

Thursday, September 11, 2025

Real median family income in the US, adjusted for inflation. And note that families have gotten smaller.

G. Verloren said...: A reminder that the "median" is a wildly misleading value to use.

A median offers no information about range, variability, etc. It ignores bi-modality of data inherently. A technically higher median tells you nothing about the actual distribution of income, or the health/wealth of the economy (or of the human beings who have to live within said economy.)

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$10, $10, $10, $10, $10, $20, $20, $20, $20, $50, $100
$5, $5, $5, $5, $5, $21, $21, $21, $21, $25, $125

The first set has a median of $20; the second set has a median of $21. The median increased by 5%! Incredible, right?! Surely the second set represents a better distribution of wealth? ...right?

No, of course not.

In the second set, 54.5% of the individuals involved lost HALF their wealth; the richest person increased their own already massive wealth by 25%; AND the total amount of wealth in the entire system went down, with $25 (8% of the total wealth) being wholly unaccounted for.

Yet the median wealth still went up by 5%. If you assume that a higher median means a better situation overall, you're in for a nasty surprise.; September 11, 2025 at 3:08 PM
G. Verloren said...: Correction: the amount missing is $21 (7.5% of the total wealth). My mistake.; September 11, 2025 at 3:10 PM
John said...: The income of the bottom 20% has gone up even MORE than the median.; September 12, 2025 at 8:13 AM

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