Should You Use Median Income or Average Income Statistics?

The Short Version:

Median customer income data is the best statistic for most business plans & tenant packages. You can get current US Census data for both median & average income by zip code on our new website: https://www.incomebyzipcode.com/

The Long Version:

Average income data is the 2nd most popular data point that folks request from us for their business plans & tenant packages. But I usually suggest using median income data – either instead of or in addition to – average income data. And here’s why.

For those of us who haven’t thought about medians or averages since our last standardized test:

  • average is the sum of a set of numbers divided by the count of numbers in the set
  • median is the middle number in the set of numbers

Here’s a fun drawing!

2015_02Image

Now let’s say you had the following simplified set of annual income data.

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

The average income for this set is $360,000. The outlier data point ($1,000,000) skews the average WAY up. Conversely, the average income would be skewed WAY down if someone had an income of $500. The median income for the same data set is $50,000. Outlier data doesn’t skew the median.

Still reading? Good on you – as my friend Nancy says. Here’s your bonus.

You can get both the most current US Census median & average income data for zip codes from our new site: https://www.incomebyzipcode.com/

Got questions about income data? Contact us, and we’ll geek out about data.

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