May 31, 2014 - 0 Comments - Data -

Average and Median Income

There are many ways to gauge income inequality in a country. If one way is to divide the population into percentiles according to their income, another is to follow statistics such as Gini coefficient. In this entry, we will interpret state of income inequality in Turkey by comparing average (mean) household income per year with median household income per year.

Average income is calculated by dividing the total national income with the population of the counrty. Median income, on the other hand, is the middle value when all the individuals are rank order from the highest to the lowest income. In Table 1, we compared the average and the median values of annual equivalised household disposable income based on 2003 prices. There are two terms that we need to define carefully. “Equivalised household” is an statistical indicator devised to correct for the calculation deviations that can result from heterogeneous household sizes and is based on a hypothetical “equivalised individual”. “Annual disposable income,” on the other hand, is what is left after all taxes are deduced from the household income.

When the average and median incomes are compared, if the median is below the average, as it is the case in Table 1, this shows that there is an unequal distribution of income that pulls the average up. In other words, the richest sectors of the society receives a proportion of the national income so high that it pulls the average above the median. Though, the discrepancy between the two values remained constant through the period.

Table 1

Sources:

Data is downloaded from the website of Turkish Statistical Institute,” Income Distribution and Living Conditions Statistics” link.

Statistical Table: “Gini Coefficient by Equivalised Household Disposable Income (Turkey, Urban, Rural, SR, Level 1)”

Note: Data is converted to 2003 basic prices using the inflation dataset. The inflation dataset is downloaded from The Central Bank of the Republic of Turkey, “GENERAL STATISTICS” link.

Statistical Table: “Consumer Price Index (2003=100) (TURKSTAT) (Monthly)”

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