Neoclassical (mainstream) economists generally consider consumption to be the final purpose of economic activity, and thus the level of consumption per person is viewed as a central measure of an economy’s productive success. Term household sector Definition: The basic macroeconomic sector that includes the entire, wants and-needs-satisfying population of the economy. The household sector is the eating, breathing, consuming population of the economy. In a word 'everyone,' all consumers, all people. This sector includes everyone seeking to satisfy unlimited wants and needs.
Median incomes are used as measures because they tend to more accurately represent what people make in a given area. Given the list of the five-household area with incomes ranging from $10,000 to $250,000, the average would be $76,400, calculated by adding up all five incomes and dividing by five. The average is higher because the highest number on the list is much farther from the middle numbers than is the lowest one. This can skew perceptions of an area's income. The median, which comes from looking at the middle number, gives a better impression of the dataset as a whole. Median Household Income.
Median household income is used in real estate to calculate the affordability of housing. The Housing Affordability Index calculates the cost of the median price home relative to median incomes.
When it goes up, it means that more people can afford to buy homes, either because their incomes are higher or because the cost of home ownership is relatively lower. When it dips below 100, home ownership is becoming relatively more expensive, and the median-earning family can't afford the median-priced house.