Tuesday, January 25, 2011

Income Numerology

Dürer, Magic Square

Now I am confused. Maybe I should call Harvard symbologist Robert Langdon.

At one hand, the ABS in its Household Income and Income Distribution, Australia, 2007-08, Summary of Findings (catalogue number 6523.0), states that:

"While the mean equivalised disposable household income of all households in Australia in 2007-08 was $811 per week, the median (i.e. the midpoint when all people are ranked in ascending order of income) was somewhat lower at $692".

As the ABS defines it, that's the total after tax income households in Australia received from a variety of sources in a week, with some adjustments (the "equivalised" bit).

Neither in that specific publication nor elsewhere in the ABS website there seems to be any reference to annual mean or median household incomes in Australia. A quick call to the ABS seemed to confirm that (ABS National Information Referral Service, 1300 135 070).

Well, you could say, that's how the ABS likes its household income data: black, no sugar and weekly. Fair enough.

However, in relation to the housing affordability problem, the media keeps mentioning:

"However, the Australian Bureau of Statistics, Household Income and Income Distribution, Australia 2007-08 says that median household income across the country is $66,820!" See here the blog entry.

Or a similar figure for Sydney (instead of Australia):

"The Demographia International Housing Affordability Survey covering markets in six English-speaking nations and Hong Kong found that the ratio of house prices to median annual household income was 9.6 in Sydney. It put the median house price at $634,300 and median income $66,200." See here for the news story.

And here for yet another (but now is the mean, not the median!):

"With the average Sydney-sider earning $66,200 a year and the median house price $634,300, the report by urban planning firm Demographia said Sydney house prices had tripled relative to incomes since the 1980s".

As the authors do not specify any periodicity, you might assume it's an annual figure. Again, fair enough: the authors like their household income data with milk, sweet, and annual.

But then, you stumble on a problem: if those are annual figures ($66,200 and $66,820), even making allowances for inflation, shouldn't they keep a relation of something like 52 to 1 to the weekly amount above ($692)?

Well, they don't. The larger figures are near 100 times the ABS weekly figure.
Googling for the string "household median income of Australia" the four top results are Wikipedia with $66,820 (here), presumably for 2007/08, further referring to the ABS, catalogue number 6523.0; and the ABS itself, catalogue number 6523.0, where those figures do not seem to be!

So, where do the figures of $66,200 and $66,820 come from?


  1. While this doesn't explain the inconsistency with the ABS publication, my suspicion is that the journalist got the figure from Wikipedia.

  2. The ABS described "equivalised" as follows:

    "Disposable household income adjusted using an equivalence scale. For a lone person household it is equal to disposable household income. For a household comprising more than one person, it is an indicator of the disposable household income that would need to be received by a lone person household to enjoy the same level of economic wellbeing as the household in question."

    So, equivalised income will generally be higher than simple household incomes (which, on average, consist of more then one person).

  3. Nope, those are not the causes.

    But at the Stable you did get the explanation:

    "I have solved the mystery. Most of the ABS stats are disposable (i.e. after tax) income. p58 of the PDF download from the ABS has median gross income of $1285 which annualises to $66,820"

  4. As the ABS defines it, that's the total after tax income households in Australia received from a variety of sources in a week, with some adjustments (the "equivalised" bit). Click Here