One of the politically hottest statistics right now is median household income, especially its slow growth. But there is a big problem with understanding what this statistic means, since it mixes up two different things: the changing composition of households and changes in incomes. If the makeup of households is altering dramatically, as it has in recent decades, median household income may be a quite misleading number.
For example, it is mathematically possible for everyone's income to be rising, while the median household income is falling. How is that possible? The paradox is caused by counting by households, when the relationship between individuals and households keeps shifting.
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