This indicator measures the annual net disposable income of the median household.
It is net income because this is the income that a household has at its disposal after tax and other deductions and receipt of social transfers. Along with employment income, net household income also includes capital and investment income (including income from private pensions), as well as income from state pensions, government transfer payments and imputed rent. It is adjusted for inflation (prices of 2010).
The median household represents the household where half of households in Germany have more and the other half have less income.
The net income of every household is weighted in line with its size and composition so that it is possible to compare the income of different households (e.g. families and single people). The weighting is carried out in line with the OECD scale. This gives the main income earner a score of 1, all other household members aged 14 and above are scored 0.5, and those under 14 receive a score of 0.3.
Changes in the structure of households can also affect net household income over time, for example the increase in single-person and single-parent households compared to households with more than one person.
The data source is the Socio-Economic Panel (SOEP).