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
There’s 5 people. Their ages are 5, 6, 7, 8, and 55.
Their average/mean age is (5+6+7+8+55)/5 = 16.2.Their median age is the value if you list all the ages of each person in order and then pick the value in the middle. So, 5, 6, 7, 8, 55. Since there are 5 values, you pick the third one in the list, which is 7.
If you were to, at a glance, just look at the average, you’d think half the people are below 16 and half are older than 16. But that 55 year old really skews things. So you look at the median. To see that the REAL middle point is 7.
In a normal distribution the median and the average are more or less the same. But when there is a big difference between the two, you can see that there’s something strongly skewing the distribution. In terms of income, if the mean income is $122K, but the median income is only $35K, that indicates a small number of VERY high earners are skewing the distribution; so a lot of income inequality. Some could make the argument that those ultra high earners therefore make “too much”.
In our case, with the above ages, that 55 year old skewing the average so much signals to us that there’s something “off” about the 55 year being in that set.
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