Business Standard
You are here » Home » Household Income


Household income is the combined net income of all members of a particular household above a set age limit. It is not necessary for individuals in question to be related in any way to be considered members of the same household. Household income serves as an essential risk measure for lenders who use it for underwriting loans, as well as a useful economic indicator of an area's standard of living.
A frequently reported economic statistic is median household income. Because many households may consist of a single person, median household income can be less than median family income because a single-person household is not considered for calculating the average family income. When comparing affluence and living standards of different cities, states or countries, looking at household income statistics is instructive. Household income is adjustable gross income at an individual level, meaning that it is the income left after tax.
How is household income used as an indicator?
This indicator is also one of the three commonly cited parameters of individual wealth. The other two — family income and per-capita income — take slightly different approaches in measuring how well people in a given area are doing financially.
Household income considers the incomes of all people above a particular age occupying the same housing unit, regardless of relation. A household can also be a single person occupying a dwelling by themselves. On the other hand, family income considers only households occupied by two or more people who are related to each other by birth, marriage or adoption. Average income earned by each person in a given area is measured by per-capita income. Two income earners in the same family or household will therefore be counted separately when measuring per-capita income.
Household income is used by economists to arrive at conclusions about economic health of a given area. To understand where citizens enjoy the highest quality of life, comparing median household incomes across various countries is useful.