Saving for retirement. Retirement seems a long way off and we need money now, so

Question

Saving for retirement. Retirement seems a long way off and we need money now, so saving for retirement is hard. Once every three years, the Board of Governors of the Federal Reserve System collects data on household assets and liabilities through the Survey of Consumer Finances (SCF). The most recent such survey was conducted in 2007, and the survey results were released to the public in April 2009. The survey presents data on household ownership of, and balances in, retirement savings accounts. Only 53.6% of households own retirement accounts. The mean value per household is $148, 579, but the median value is just $45,000. For households in which the head of household is under 35, 42.6% own retirement accounts, the mean is $25, 279, and the median is $9600.13 What explains the differences between the two measures of center, both for all households and for the under-35 age group?

Explanation / Answer

Mean and Median both desrcibes the centre of the measures.

Mean combines all observations and divide it by total number.

In Median if data is symmetric then mean=median,

if data is right skewed then  mean is greater than median

   if data is left skewed then  mean is smaller than median.

In given example,

in 1st case mena value $148,579 is greater than median value $4500, so the data is right skewed. and the same applies in 2nd case also.

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