Why do you recommend using median income instead of average income?

Let’s say you had the following simplified population & income numbers:

Person 1: $30,000
Person 2: $50,000
Person 3: $1,000,000

The average income for this population is $360,000. The outlier data point ($1,000,000) skews the average up. Also, the average would be skewed down if there was a person with $0 in income.

The median income for the same population above is $50,000. The outlier data point ($1,000,000) doesn’t skew the median.

If the data are equally distributed (i.e. $30K, $40K, $50K), then the average number won’t be skewed by outliers. But if the data are unequally distributed, as in the case of income, then the median is the better statistic.

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