Consumer Income: Definition & Statistics

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Lesson Transcript
Instructor: Shawn Grimsley

Shawn has a masters of public administration, JD, and a BA in political science.

Consumer income is crucial for the functioning of our consumer-based economy. In this lesson, you'll learn what consumer income is, examine some related concepts, and see some relevant statistics.


Consumer income is the money that a consumer earns from either work or investment, such as dividends distributed by companies to its shareholders and the gain realized on the sale of an asset, such as a house. When you combine these income sources, it's often referred to as aggregate income. However, life is never that easy, so let's take a closer look at consumer income.

Just because you make money, doesn't mean you are actually free to use it all. After-tax income is the income that a consumer has left after paying taxes. Disposable income is the income that is left after the consumer has made any mandatory payments, such as payment of debts and other legal obligations, such as child support. Disposable income is what businesses hope consumers will spend on their products and services.


Let's take a look at some data from the U.S. Census Bureau regarding consumer income. Specifically, we'll be looking at median household income, but let's make sure we understand the relevant terms so we can better understand what the data means.

A median is the numerical value in statistics that separates the top half from the bottom half. For example, in the numerical series 1, 2, 3, 4, 5, 6,7, the median is 4. Median household income is a measure of income produced by all members of a particular household that are over a certain age, such as a husband, wife, and a college kid.

Income in the Census Bureau's calculation includes wages, salaries, commissions, bonuses, tips, self-employment income, interest income, dividends, rents, royalties, regular payments from a trust fund, social security benefits, and retirement benefits, along with some miscellaneous categories we will not bore you with.

Now that we have defined our key terms, let's get to the data reported by the Census Bureau:

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