What does median household income represent?

Median household income is a statistical measure that represents the income level at which half of the households earn more and half earn less within a given area. It specifically focuses on the household that lies at the exact middle of the income distribution, thus effectively capturing the midpoint in terms of income. This measure is particularly valuable because it is less affected by extreme values or outliers compared to mean income, providing a more accurate reflection of the typical household income.

In income distributions, especially where income is highly skewed, using median income can reveal important insights into economic conditions and inequality within a community. Therefore, it serves as a crucial indicator for understanding the financial well-being of households in an area.