Saturday, July 3, 2010

Median Income to Rise by 2020

I haven't had much to write about in the couple of days. Today, when I turned to the front page of the newspapers, I saw the headlines that states that average Singaporeans can expect their incomes to rise from the current median income of $2400 per month to $3,100 per month.

The funny thing about how I read news articles is not on what they report but rather on certain aspects that probably interests noone else but me. In reading this news article, I was more interested in why the goal was to raise the median income instead of the average/mean income. The 2nd thought that formed in my head was this: Will an average Singaporean earn more or less than the median income of $3,100 per month?

The difference between median and mean

This is probably secondary school maths but I guess there is a slight difference between median and mean (or average) when used in statistics. Generally, it depends on the data set and whether the mean or the median gives you the more accurate representation of what "average" really means.

When data is symmetrically distributed, the mean is a good way of calculating the average income. The mean is simple obtained by adding all incomes together divided by the total population. However, when data is skewed either to the left or the right, it might be better to use the median income to give a more accurate reflection of what "average" is in Singapore. So the question that is left to be answered is whether the income distribution curve is skewed to the left or the right. (Of course, to measure income that is not symmetrical, the median is a much better way that the mean).

So there is the tricky part if you say that the "average Singaporean can expect his income to rise because the median income is expected to rise." Here, what it means is that median income actually represents the "average" Singaporean's income more truthfully.

So I basically answered my two thoughts in this posting.

1. To measure income which is often not symmetrically distributed, we use median income which reflects the average income much better.

2. An average Singaporean can expect to earn the median income of $3,100 in ten years time and not more or less.

Other questions that will probably go unanswered are these:

1. Is the mean income in Singapore higher or lower than the median income?
2. Which one is harder for the government to achieve? Increasing the mean income or the median income?

10 comments:

  1. Ask Bill Gates and Warren Buffet to take up SG citizenship. Mean income sure jump up!

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  2. Double the salaries of all govt workers, especially our dear MPs who worked so hard to increase the median income.

    Hey voila, median income increase! :)

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  3. Wonder if the target of $3100 is before inflation adjustment? So what if it is an increase in median income when the cost of living increases at a more furious pace. Focus on the real increase in income rather than an absolute increase, which may not translate to better standard of living.

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  4. $3,100 is before inflation adjustment.

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  5. You mean $2,400 is really the median income right now in 2010? Seriously, I am surprised. After reading the news about HDB upgraders, more and more people buying mass market condos, and stuff like iPhone craze and throngs crushing the NATAS fair, you'd have thought the median income was closer to $5,000 instead!

    I can't really reconcile the number provided by the Govt with the news being reported in the last 2-3 years or so. Maybe I should get my head checked....haha

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  6. I agreed with Musicwhiz.

    Assuming both husband and wife are working and their total combined income is 4,800. After deducting CPF total houshold income is 3,840.

    Can one suvive in Singapore?

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  7. financial freedomJuly 5, 2010 at 9:19 PM

    I guess in this news article, the median income is for an individual. So it is also likely that the average household income could be greater than $5000. (note the difference between median income and average household income..i think median household income will be lower than average household income in Singapore)

    I am not too sure whether the median income already takes into account stuff like bonuses and employer's contribution to CPF but I guess it most probably does.

    With a total household income of $3,840, a household can survive if they do not spend on luxury items like car, cable TV and fine dining, etc.

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  8. $3840 should be able to survive if one does not indulge in luxury items like car, branded stuff and expensive holidays.

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  9. If the median income is $2400 it really show how underpaid are we. I earn $2400/mth and I got problem surviving every month.

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  10. It is indeed difficult to survive on $2400 per month. I hope that your pay will increase as the years go by

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