Question

The distribution of individual incomes in the United States is strongly

skewed to the right. In 1997, the mean and median incomes of the top 1% of
Americans were $330,000 and $675,000. Which of these numbers is the
mean and which is the median?

Answer 1

Explanation:

The fact that the distribution is "skewed to the right" means that there are a few individuals with extremely high incomes that pull the average (mean) income higher, while the majority of individuals have lower incomes. In such a distribution, the median income is usually lower than the mean income.

In the case of the incomes of the top 1% of Americans in 1997, we are given that the mean income was $330,000 and the median income was $675,000. Since the median income is higher than the mean income, this confirms that the distribution is indeed skewed to the right.

Therefore, the median income of $675,000 is the value at which half of the individuals in the top 1% have incomes higher than $675,000 and half have incomes lower than $675,000. The mean income of $330,000 is the average income of all individuals in the top 1%.