[John Kelly]

Always talk about carpet cleaners earnings. You hear a lot about the average wage. There is an interesting article on the BBC website about averages. Always thought the average wage figure was on the high side heres why:

[Mike Halliday]

would the other 2699999 people who earn as much as me please put their hands up

I'm surprised there are only 2.7m people who earn over a grand

[carlton care]

Probably about 5% of the working population, so not really surprising.

[John Kelly]

The crux of the story on the bbc was that averages are worse than useless. Funny one is that everyone one has more than the average number of feet. Apparently the number of people with one legs puts the average below 2.
What I thought the table demonstrated was that there are a hell of a lot of people earning less than what most of us would consider to be a bad week or even day.

[francis]

You also have to look at who produced the data for the above graph.   It was HBAI.  For those not aware of who they are, it stands for "Households Below Average Income".  Not to fazed by:
a) that they do surveys for their figures
b) they have an interest in keeping income figures low :

[PaulKing]

kno it the bbc website but where is the graph from ?

makes you think thought doesn't it?

[John Kelly]

Full article:

http ://news.bbc.co.uk/1/hi/magazine/7581120.stm

you need to delete the space between http  and :

as you can't post links on here now.

[PaulKing]

there was a bloke in get carter drinking a pint in the long bar that had 5 fingers and a thumb wonder if he push the average up for fingers?

[rich hand]

John, why does the figure show the average wage to be on the high side?

[John Kelly]

Thats the hole crux of the article. It is demonstrating that averages are very misleading because a few extreme figures can drastically alter the averages. What happens is that the 5% of the population who earn millions push up the average wage. Whereas in truth the vast majority don't earn anywhere near it. The mean figure is actually the figure which matters.
I believe when these figures are bandied about it can make people feel undervalued and lead to increased wage demands from those who thing they are earning below average wages when in fact they are pretty normal.
I posted this in response to the post of the guy earning £500 a week from carpet cleaning which in the face of it doesn't seem at all bad.

[Shaun_Ashmore]

What it also doesn't tell you is taht if your family income doesn't reach a certain figure you are entitled to tax credits and free school dinners for teh kids, may be a council house rent discount and council tax discount and may be more so the figure that you think thye take home may be actually alot more.

Like Jackanory the picture isn't clear you need the other installments of it.

Shaun

[Doctor Carpet (Ret'd)]

For all anoraks out there here is a simple explanation of "AVERAGES"

Whilst "mean" is what most people think of as average, "mode" is the best explanation of "average" wages in this country as it reflects the wage that most people earn:-


Averages
Mean

There are four types of average: mean, mode, median and range. The mean is what most people mean when they say 'average'. It is found by adding up all of the numbers you have to find the mean of, and dividing by the number of numbers. So the mean of 3, 5, 7, 3 and 5 is 23/5 = 4.6 .
Grouped Data

When you are given data which has been grouped, you can't work out the mean exactly because you don't know what the values are exactly (you just know that they are between certain values). However, we calculate an estimate of the mean with the formula: ∑fx / ∑f , where f is the frequency and x is the midpoint of the group (∑ means 'the sum of').
Example

Work out an estimate for the mean height, when the heights of 23 people are given by the first two columns of this table:
Height (cm)    Number of People (f)    Midpoint (x)    fx
101-120    1    110.5    110.5
121-130    3    125.5    376.5
131-140    5    135.5    677.5
141-150    7    145.5    1018.5
151-160    4    155.5    622
161-170    2    165.5    331
171-190    1    180.5    180.5

 

In this example, the data is grouped. You couldn't find the mean the "normal way" (by adding up the numbers and dividing by the number of numbers) because you don't know what the values are. You know that three people have heights between 121 and 130cm, for example, but you don't know what the heights are exactly. So we estimate the mean, using "∑fx / ∑f".

A good way of setting out your answer would be to add two columns to the table, as I have.

"Midpoint" means the midpoint of each of the groups. So the first entry is the middle of the group 101-120 = 110.5 .

Now,
∑fx (add up all of the values in the last column) = 3316.5
∑f = 23

So an estimate of the mean is 3316.5/23 = 144cm (3s.f.)
Moving Averages

A moving average is used to compare a set of figures over time. For example, suppose you have measured the weight of a child over an eight year period and have the following figures (in kg):
32, 33 ,35, 38, 43, 53, 63 ,65

Taking the mean doesn't give us much useful information. However, we could take the average of each 3 year period. These are the 3-year moving averages.
The first is: (32 + 33 + 35)/3 = 33.3
The second is: (33 + 35 + 38)/3 = 35.3
The third is: (35 + 38 + 43)/3 = 38.7, and so on (there are 3 more!).

To calculate the 4 year moving averages, you'd do 4 years at a time instead, and so on...
Mode

The mode is the number in a set of numbers which occurs the most. So the modal value of 5, 6, 3, 4, 5, 2, 5 and 3 is 5, because there are more 5s than any other number.
Range

The range is the largest number in a set minus the smallest number. So the range of 5, 7, 9 and 14 is (14 - 5) = 9.
The Median Value

The median of a group of numbers is the number in the middle, when the numbers are in order of magnitude. For example, if the set of numbers is 4, 1, 6, 2, 6, 7, 8, the median is 6:
1, 2, 4, 6, 6, 7, 8      (6 is the middle value when the numbers are in order)
If you have n numbers in a group, the median is the (n + 1)/2 th value. For example, there are 7 numbers in the example above, so replace n by 7 and the median is the (7 + 1)/2 th value = 4th value. The 4th value is 6.

[Doctor Carpet (Ret'd)]

So in the graph shown the "mode" is around £275 pw.

Bonedry is earning £500 pw roughly getting on for twice the most common wage.

However he refuses to answer the question if his £500 is gross takings or after overheads or even after putting money aside for his income tax and National Insurance bills payable half yearly (and for one-man-band LTDs paying most income in the form of dividends, payable annually.)

[carlton care]

Another way to describe average earnings might be to say it's a hypothetical figure that nobody actually earns but the majority are around that figure. Some slightly more some slightly less..................but a small percentage will earn a lot more, whereas a high percentage will earn a lot less.

robert m

[John Kelly]

Robert, the graph is showing that the majority earn well below what is termed the average.

[Mike Osbourne]

Average really doesn't help anybody as you just add up everyones salary and divide by the number of people.

What's useful is the middle of what is a skewed bell curve, which represents the majority.

I suspect it's skewed because of goverment handouts make it less worthwhile to bother.

[carlton care]

Think thats what I said John !

" a high percentage will earn a lot less "

But we know that anyway. Always was that way and always will be that way.

robert m

[John Kelly]

No you said the "majority" are around that figure when in fact they are not.

[Doug Holloway]

Hi Guys

I remember in my technical days that a more useful graph was obtained by removing the top and bottom extreme results, say 3 % each side.

This I would suspect would give an average around 320

Cheers

Doug

[mark_roberts]

Dont forget as selfemployed we need to allow for sickpay, holiday pay, pension, etc.

Mark