What Is the Median Income in the United States?

by John Sides on March 13, 2008 · 5 comments

in Blogs

Ezra Klein is surprised that a family income of $88,000 puts you in the top 20% of Americans. He thought it would take a larger income. This gets at an interesting question: what do people believe about the income distribution of the United States? And how do those beliefs accord with reality?

A colleague, Eric Lawrence, and I asked this question in a 2007 survey:

How much income do you think the average American household earns in a year? If you do not know, you can just give your best guess.

The median answer was $40,000. The actual median is $48,000. On average, people’s estimates are fairly accurate.

Actual income levels do affect median estimates:

avgincome.PNG

This makes sense: people’s estimates in part reflect their personal circumstances and surrounding environment. But only in part. On the whole, I was impressed with how accurate estimates were.

This “analysis” is just a first cut. I’d love any questions and suggestions in the comments.

{ 5 comments }

Keena Lipsitz March 13, 2008 at 5:36 pm

I’m actually quite surprised by the accuracy of the average person’s guess. My students usually guess much higher (this may have something to do with the fact that they live in New York City even if they go to a public university). My students are even more off, however, when you ask them about their chances of making more money than their family currently does. They are always so optimistic! I’m not sure what your project is about, but it might be interesting to ask some questions that get at an individual’s belief about their chances or their children’s chances of making more/moving out of whatever economic class they (may think they)are in.

Matt Jarvis March 13, 2008 at 7:06 pm

John…how about the errors? I could see a situation where the poorest AND the richest have the most error.

Of course, two controls jump out at me: education (for getting closer to actual result, but also creating more exposure to people making more, so they might miss high) and lib/con.

Matt Jarvis March 13, 2008 at 7:09 pm

Wait….did you just link to wikipedia for the “actual”?

LOL….make sure no students read this post!

John Sides March 14, 2008 at 12:39 pm

Matt, I used Wikipedia because Klein did. The secret truth about Wikipedia is that it’s really quite good.

As for the errors, the median absolute error does decrease somewhat from low to high education categories.

A simple regression of the estimates on income, education, and lib/con ideology shows that only income has a statistically significant effect.

Keena, our focus is on the extent and effects of knowledge, not on people’s beliefs about class or upward mobility. That, however, would be a nice complement.

Matt Jarvis March 18, 2008 at 2:56 pm

I know, I like wikipedia (for general knowledge, not as a publishable source) myself…just thought it was funny.

Interesting results of the regression. I’m wondering what the interpretation is. They’re interesting data; I think there are a number of interesting questions you might answer with them.

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