Income

Background

While money may not buy happiness, it is an important means to achieving higher living standards and thus greater well-being. Higher economic wealth may also improve access to quality education, healthcare and housing.

Household Net Adjusted Disposable Income

Household net-adjusted disposable income is the amount of money that a household earns, or gains, each year after taxes. It represents the money available to a household for spending on goods or services. 

Household disposable income includes income from economic activity (wages and salaries; profits of self-employed business owners), property income (dividends, interests, and rents), social benefits in cash (retirement pensions, unemployment benefits, family allowances, basic income support, etc.), and social transfers in kind (goods and services, such as health care, education and housing, received either free of charge or at reduced prices). Across the OECD, the average household net-adjusted disposable income is 23 047 USD a year.

Household Financial Wealth

Household financial wealth is the total value of a household’s financial worth, or the sum of their overall financial assets minus liabilities. Financial wealth takes into account: savings, monetary gold, currency and deposits, stocks, securities and loans. These financial assets can provide an important source of revenue on their own; either through their sale or refinancing, via pensions, via interest and dividend payments, or other property income. Ideally, measures of household wealth should include real assets (e.g. land and dwellings), but such information is currently available for only a small number of OECD countries.

Such wealth makes up an important part of a household’s economic resources, and can protect from economic hardship and vulnerability. For example, a low-income household having above-average wealth will be better off than a low-income household with no wealth at all. Across the OECD, the average household net financial wealth is estimated at 40 516 USD.

The cost of living is taken into account in income and wealth figures as the reported values are adjusted by Purchasing Power Parities (PPPs). PPPs reflect the differences in cost of living for a comparable amount of goods and services consumed by households.

Over the past fifteen years, households have enjoyed higher income on average and financial wealth has increased in many OECD countries, most notably in Israel, Germany and Sweden. Despite the general increase in living standards, some groups have been left behind and inequality has also increased over the same period. Some OECD countries such as Chile and Mexico, but also Turkey, the United States and Israel, have a much more unequal income distribution than others. By contrast, the Nordic and Eastern European countries are characterized by lower income inequalities. On average in OECD countries, the average net adjusted disposable income of the top 20% of the population is an estimated 44 625 USD a year, whereas the bottom 20% live on an estimated 9 156 USD a year.

Income in Detail by Country