The Bureau of the Census provides figure on the average annual income of all Pakistan households in the publication Current Population Reports. For 2015 the mean household income was $ 32,144 and the median houschold income was $ 25,986. Which measure of central tendency do you think is appropriate? Explain your answer.
Inverse Normal Distribution
The method used for finding the corresponding z-critical value in a normal distribution using the known probability is said to be an inverse normal distribution. The inverse normal distribution is a continuous probability distribution with a family of two parameters.
Mean, Median, Mode
It is a descriptive summary of a data set. It can be defined by using some of the measures. The central tendencies do not provide information regarding individual data from the dataset. However, they give a summary of the data set. The central tendency or measure of central tendency is a central or typical value for a probability distribution.
Z-Scores
A z-score is a unit of measurement used in statistics to describe the position of a raw score in terms of its distance from the mean, measured with reference to standard deviation from the mean. Z-scores are useful in statistics because they allow comparison between two scores that belong to different normal distributions.
Given that
The mean household income in 2015 = $32,144.
The median household income in 2015 = $25,986.
Mean > Median
The median household income is the one which divides all households in two halves.
Median income is the amount which divides the income distribution into two equal groups, half having income above that amount, and half having income below that amount.
The mean income is the average income earned by households. In the case of mean income, the income of all households is divided by the number of all households.
The mean will be higher than the median income, with the top earning households boosting it.
Mean income (average) is the amount obtained by dividing the total aggregate income of a group by the number of units in that group.
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