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In his book (Evil Geniuses) about how the USA got where it currently is, Kurt Andersen speculates about how far wealth and income inequality has risen in the last few decades.

He attempts to visualise in concrete terms the implications by using this thought experiment. What would happen to the median household income were US income and net wealth were distributed evenly across households? (Andersen, Kurt. Evil Geniuses (p. 301). Ebury Publishing. Kindle Edition. ):

In this imaginary America 2, every household has a net worth of $800,000 and an annual income from all sources of $140,000.

In his words, the current distribution of US wealth and income looks like this:

The absolutely middle American economically, somebody with more than the poorer half of Americans and less than the richer half, lives in a household where the earners earn $64,000 a year and have a net worth of $100,000.

Are Andersen's illustrations for the extent of US wealth inequality correct?

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    ... Since household income (or wealth) is presumably positively correlated with household size, your median would be artificially high in this comparison. The median that weights all households equally (comparable to Andersen's mean) would be lower, and the inequality would actually be even bigger. Of course ignore this if your statement "the median person lives in a household..." was not precise. Also, arguably households are not the best way to measure inequality in the first place, precisely because of the household size effect (is it "bad" that some households are larger than others?).
    – nanoman
    Commented Apr 1, 2021 at 8:35
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    @matt_black Sorry, but I think that confuses things further. Andersen's numbers are how much each household would have in the hypothetical case that income and wealth were distributed equally. That is just another way of defining the mean of the current actual distribution. The hypothetical distribution has no variation and so its mean and median are equal to that same number. The difference between the mean and median of the actual distribution is a measure of inequality among households. I thought that was why you were comparing Andersen's numbers to the actual median.
    – nanoman
    Commented Apr 1, 2021 at 11:06
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    @matt_black Okay, but I think your previous phrasing "Is the mean household income in the USA $140K...?" was fine because that is what Andersen effectively claimed. And it was the correct basis for the calculation in DavePhD's answer. Andersen just gave a longwinded explanation (in terms of imaginary redistribution) of what the mean means.
    – nanoman
    Commented Apr 1, 2021 at 11:18
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    @Oddthinking See my other comments -- the point is that OP's description of the book makes it clear that Andersen is describing a hypothetical equal distribution of income and wealth, keeping the national total fixed. That's enough to make the calculation unambiguous (if every value is the same, then the mean and median are the same -- and specifically equal to the mean, not median, of the real data).
    – nanoman
    Commented Apr 1, 2021 at 16:53
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    Dear commenters: Everyone acknowledges that this hypothetical thought experiment is not stable; it is irrelevant and you do NOT need to tell us again. We all agree IN THE HYPOTHETICAL WORLD median and mean are the same; it is irrelevant and you do NOT need to tell us again. We all understand the illustrative analogy is not a perfect model; it is irrelevant and you do NOT need to tell us again.
    – Oddthinking ♦
    Commented Apr 2, 2021 at 3:51

1 Answer 1

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In the 4th quarter of 2020 the net worth of US households was $122,886,624 million.

The number of US households was 128.451 million.

Therefore, the mean net wealth was $956,681

Total personal income was $19,502,071 million.

Therefore, the mean income per household was $151,825.

In Andersen's hypothetical world where all households have the same wealth and income, the median income/wealth is the same as the mean income/wealth (this is a simple statistical consequence of a symmetric, flat distribution). So the published claim about median income is broadly correct.

(In the above "income" is much more than salaries, profits, interest, dividends and capital gains, for example "employer contribution to government social insurance", and net payments from "social security", "medicaid", "medicare", "unemployment insurance", "veteran's benefits", etc., while personal income taxes are not subtracted out.)

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    Rather than just state the numbers, it would be good to use them to evaluate the specific statements in the question. As I read it: Andersen's numbers are approximately correct, and if anything may slightly understate the extent of inequality (differences between median and mean).
    – nanoman
    Commented Apr 1, 2021 at 8:18
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    @DavidHammen See my comments on the question. I think it is indeed appropriate to evaluate Andersen's claim by computing mean income and wealth, because Anderson is considering a hypothetical where the total income and wealth are equally distributed, which is a way of defining the mean.
    – nanoman
    Commented Apr 1, 2021 at 11:19
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    @DavidHammen: In a hypothetical world like Andersen is discussing, where everyone has the same net income, the mean net income is equal to the median net income.
    – Michael Seifert
    Commented Apr 1, 2021 at 12:00
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    @DavidHammen, you seem to entirely miss the point so let's spell it out in a comment: The question was about "What would happen to the median household income were US income and net wealth were distributed evenly across households?" In that case the median is equal to the mean (as is the highest, the lowest etc). So to compute the mean income and mean net worth is exactly as computing the median income or net worth under the proposed redistribution. The computation is thus entirely accurate and does not make any mistake confusing median and mean.
    – Kvothe
    Commented Apr 1, 2021 at 12:01
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    The only answerable version of the OP's question is to treat it as an elementary statistics exercise divorced from reality. It ignores the fact that if everyone's income and net worth was equal, the economic situation of the USA would be completely different. (Obvious example: would Elon Musk have been able to found Tesla and SpaceX, with a personal net worth less than USD 1m, even if he had still wanted to?)
    – alephzero
    Commented Apr 1, 2021 at 14:58

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