The Fed tags American wealth at around $58 trillion total, last I recall. I suspect the median is a bizarre way to calculate American wealth.
That includes equities, real estate, precious metals, homes, bonds, etc.
The stock market rebounding back upward nearly 100% added trillions to that no doubt.
I would think it'd be far better to take the middle 80% of Americans and find an average wealth value (lop off the top 10% and bottom 10%). That would give you a perspective on how most of the nation is doing, especially since the very top radically skews the data upward.
"They [the 1%] controlled nearly a third of the nation’s financial assets (investment holdings) and about 28 percent of nonfinancial assets (the value of property, cars, jewelry, etc.). These measures will be particularly interesting to revisit when the new, post-recession data arrives."
"The Times had estimated the threshold for being in the top 1 percent in household income at about $380,000, 7.5 times median household income, using census data from 2008 through 2010. But for net worth, the 1 percent threshold for net worth in the Fed data was nearly $8.4 million, or 69 times the median household’s net holdings of $121,000."
>I would think it'd be far better to take the middle 80% of Americans and find an average wealth value (lop off the top 10% and bottom 10%). That would give you a perspective on how most of the nation is doing, especially since the very top radically skews the data upward.
How does the enormous wealth of the top 1% skew the median wealth upwards or downwards? I think you might be confusing median with average.
The 1% has a very limited ability to drive change in the median wealth. The average wealth is very likely much much higher (probably closer to a half million) than the median, signaling vast income inequality.
The median is a much more useful statistic when dealing with this kind of distribution, as it applies to a much larger population than the average, which is useless for ~80% of the population as an indicator.
I would suggest that the median is taken, in this case, because it provides the biggest and sexiest headline number.
The average (and by extension the total) wealth has gone down by a much smaller percentage since 2007. The fluctuations just happened to have hit the people around the middle particularly hard. The people at the bottom haven't seen their net wealth decline at all, because they never had any. The people at the top have seen their net wealth decline substantially, but since it was largely in other asset classes less so [percentage-wise] than the people right in the middle, whose net wealth was dominated by home equity.
Bottom line: recessions suck. They happen every decade or so. Plan with this in mind.
It's worse than strange, I don't think it works at all.
Wealth increases from the bottom 1% to the top 1% at an ever accelerating clip. If you take the median, you have absolutely no clue what the health of the groups above or below look like.
For example: if the median wealth is $77,000 --- you can't use that to then calculate how much actual wealth is in the middle 80% of the country (not even close in fact), because that $77k figure is radically off base for the massive skew that the top 10% in that 80% group is going to contain. But you have no means to derive how much wealth you're talking about being contained by that 10% group in the top of the 80% bracket (no means to figure out the skew at the top or bottom).
If you had 1 million data points, and your median is $77k, what does that tell you about the total wealth in the 1 million? It tells you almost nothing. What's the increasing skew like for the top 10,000 in that million? Because that probably contains 30% of all the wealth in the million set.
That's the point of removing the top 10% and bottom 10% from the equation. Which I noted in the comment you replied to. The top 10% radically skews the picture.
Calculating wealth by a median, in a nation of 300 million people, only barely kinda-sorta works if you have a very large number of data points, otherwise you get a completely useless data point. Also, medians don't work very well due to population bunches when it comes to wealth, it's not smooth. So if your middle numerical just misses a wealth spike a few points up above the median how useful is your information? If it just misses a big wealth plunge a few points down, what does it tell you about the health of the people in the bottom 40%?
That includes equities, real estate, precious metals, homes, bonds, etc.
The stock market rebounding back upward nearly 100% added trillions to that no doubt.
I would think it'd be far better to take the middle 80% of Americans and find an average wealth value (lop off the top 10% and bottom 10%). That would give you a perspective on how most of the nation is doing, especially since the very top radically skews the data upward.
http://en.wikipedia.org/wiki/Wealth_in_the_United_States
Interesting data point on the top 1% wealth wise:
"They [the 1%] controlled nearly a third of the nation’s financial assets (investment holdings) and about 28 percent of nonfinancial assets (the value of property, cars, jewelry, etc.). These measures will be particularly interesting to revisit when the new, post-recession data arrives."
"The Times had estimated the threshold for being in the top 1 percent in household income at about $380,000, 7.5 times median household income, using census data from 2008 through 2010. But for net worth, the 1 percent threshold for net worth in the Fed data was nearly $8.4 million, or 69 times the median household’s net holdings of $121,000."
http://economix.blogs.nytimes.com/2012/01/17/measuring-the-t...