What does the standard deviation of income mean?

Answer 1

If you subtract each value from the overall average, that is a deviation.

Take all these 'deviations' an average *them* and you will have something very close to the 'standard deviation'. It is an idea how wildly the values fluctuate around the average. Big standard deviations, large differences in income. The more unequal the society, the greater the difference between what Bill Gates makes and what I make.

As a technical matter, the standard deviation is a bit more complicated. To be technical, we first square the deviations, take the average, then take the square root of that average. We often also have to make some adjustments because we are usually dealing with sample data, and not population data.

Answer 2

It's a measure of how spread out the data are around the mean.

A small standard deviation means most or all of the values are clustered close to the mean. A large standard deviation means they're more all over the place, with many being far from the mean (average).

It's sort of like "average distance from the mean" (average), but the formula is a little more complicated than that.

Answer 3

Standard deviation for samples of things that have a normal distribution (bell shape for example the heights of people) is usually interpreted as the possible error in a measurement or the width of the spread. However income does not have a normal distribution.A large fraction of the total income at the extreme high end, so the standard deviation doesn't "mean" anything, it is just a number you can calculate. The income spread is usually described by ratios of income share of the top and the bottom 10 or 20% or the GINI index.
http://en.wikipedia.org/wiki/Gini_coefficient

Answer 4

It is the average of all the deviation by each value respect average income.

You have a country with an average income of USD 5.000.
In these country one million inhabitants win USD 6000 and other million win USD 4000. The deviation for each inhabitants is USD +1000 or USD -1000, but we only can express the deviation like absolute value, so the deviation for each inhabitants is USD 1000. If each inhabitants has a deviation of USD 1000 then the average of ALL deviation (standard deviation) is USD 1000.

In practice, we have a lot of deviation for each people (USD 500, USD 2350, USD 1678, etc,etc, etc,) and the average of deviation (standard deviation) could be (example) USD 1315

Any material of basic statistic can give you a more detailed explanations

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