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In the discussion about poverty in New Zealand, lots of statistics are bandied around and often quote means and medians with gay abandon.  Very often it seems that the quoter does not know the difference between these two parameters, or if they do, does not understand the significance.

For example, a common definition of poverty in a country such as ours is being below 60% of the median (middle) income for a family.  This is quite different to the mean (average). And because of the distribution of incomes within New Zealand, is well below that level.

 If 100 people each have an income of $1000 per week, the mean (average) income is $1000, as is the income of the middle person (the median).  If five of those workers get a pay rise to $5000 per week, the mean goes up to $1200, but the median remains at $1000.  This is the sort suspect information we get when a politician claims that we are all better off because the average income has risen.

 Worse than that, if five of those workers get their pay cut to $500 per week, the average still rises to $1175 which looks respectable, but the median remains at $1000.  The true picture is hidden, even with the two parameters and we need the actual levels for bands of 5 or 10 workers from the best paid to the worst to know what is really going on.  It is this information that shows that the best paid workers in New Zealand have done very well over the last three decades to the detriment of the lowest paid who have barely advanced at all.

Beware of means and even medians, and look behind the data to see what is really happening.

 

 

Average is mean, but median isn't

 
 
 
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