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
When there’s a big gap between Median and Average, it means there are extremes pulling up the average.
Lets pretend the numbers reflect the net worth of 9 30 year-olds in a room.
The median is $35K meaning that person number 5 (the middle or median) has that much net worth. Half the people in the room have more than him, half have more. He is in the exact middle.
But lets say one of the 9 people had a huge net worth, we’re talking like $M. The average net worth in the room could theoretically be over $100k. (the math to keep things simple: everyone else has $35K except the last person has $1M. The total net worth in the room is $1.28M. Divide that by 9 and you get an average net worth of $142K)
TLDR: Averages can be misleading due to outliers. Sometimes median tells a better story of what the “average person” in a group is actually getting.
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