When reading this information an individual may assume that, if they live in a household that the values presented might apply to them. Two such examples are presented below
The benefits of the Trans-atlantic Trade and Investment Partnership (TTIP) trade deal is supposed to benefit the average household by £400. This is presented in the Government document “TTIP: Separating Myth From Fact”. It is noted that it does not state clearly which is being presented.
The cost of leaving the EU is estimated to cost the average household £4300.
This post is not about the integrity of those numbers. The actual numbers may or may not be manipulated for political ends. This post is to understand how appropriate the use of an average in these contexts?
The current economy does not benefit everyone equally, and therefore it is reasonable to assume that if the overall economy is affected by the two events described above then the impact on a household would be relative to how well it currently benefits.
The values above can be adjusted by both income (before tax) and wealth using 2013-14 data. There is less inequality by income, although it is noted that the distribution is based on survey data that is very likely to under-represent the income of the top percentiles.
The Benefit of TTIP by Income and wealth
The Cost of Brexit by income and wealth
There is a discrepancy when looking at the 1st percentile by wealth as those at the bottom have negative wealth.
The following conclusions can be drawn.
TTIP
Adjusting by income, the £400 benefit kicks in at the 80th percentile . At the 50th percentile the benefit is £236.
Adjusting by wealth, 10.3 million households don’t make £100 out of TTIP.
The top 1% make £1715 (by income) and £2055 (by wealth)
Brexit
The 10th percentile lose less than £1368 (adjusting by income) or £96.50 (adjusting by wealth)
Half the country lose less than £2493 (adjusting by income) or £1730 (adjusting by wealth)
The top 1% stand to lose £18,434 (by income and £22088 (by wealth)
All this assumes that those figures are correct in the first place.
The conclusion is that when mean values are used to represent changes income and wealth the chances are that won’t be as relevant to the general public as suggested.
When trying to understand why a particular course of action is being pursued, it is always a good idea to see who benfits and who loses out.