I was looking up the average networth of 30 year olds in the United States and it said: “The average net worth is $122,000 and the median net worth is $35,112” my brain is too smooth please help.
In: 8
Average is, well, the average. You take all values, add them up, and divide them by how many you have. Average TENDS TO BE more dependent on the values themselves rather than the number of values.
Median is the middle. 50% of people make less, 50% of people make more. The median TENDS TO BE more dependent on the number of values rather than the values themselves.
Let’s do an example. Say a class of 11 students had a test and the scores were
2, 3, 10, 13, 16, 22, 23, 33, 40, 66, and 100
The median is 22 because that’s the middle value. Half the students did better, half the students did worse.
The average, however, is actually (rounded) 29.
Now let’s take 2 scenarios.
The first is that there are actually 13 kids in the class, not 11. 2 kids were just sick and had to take the test later. They both scored 29. The average remains unchanged, but the median now becomes 23. Since we added 2 new data points, the median went up by 1 student but also because the scores were equal to the average, the average remains unchanged.
Scenario 2 is back to 11 students, but this time the teacher realized they forgot to grade the extra credit question that adds 20 points to the test. The only person who got the extra credit was the student prodigy who got the perfect score, replacing the 100 with a 120. The median remains unchanged as no new scores were added but the average increases to 32.
What you discovered is the “Wage Gap”. Half of Americans make less-than 32K, but people above the median tend to make significantly more than 32K, enough to make the average 4x the median. The problem becomes more apparent when you realize that there’s still a signifigant number of people above the median that still make around the median. People who tend to make a lot of money REALLY make a LOT of money.
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