According to the U.S. Federal Reserve, between 1989 and 2013 the median family net worth chnaged...

According to the U.S. Federal Reserve, between 1989 and 2013 the median family net worth chnaged from $85060 to $81400 whereas the mean family net worth changed from $342300 to $528420. What do these statistics suggest about the change in distribution of family net worth from 1989 to 2013? Why ?

Expert Solution

In 1989, Median family net worth = $85060

Mean family net worth = $342300

Mean family net worth is very high than median family net worth which shows that distribution of family net worth is right skewed.

In 2013, Median family net worth = $81400

Mean family net worth = $528420

Mean family net worth is very high than median family net worth which shows that distribution of family net worth is right skewed. We also see that there is decrease in median and increase in mean value between 1989 and 2013. Thus, more number of family net worth is less than mean in 2013 as compared with 1989. And, there is an increase in mean family net worth between 1989 and 2013.

In summary, below changes in distribution of family net worth from 1989 to 2013 can be concluded.

The distribution of family net worth in 2013 is more right skewed as compared to 1989.
The mean family net worth increased between 1989 and 2013.
The median family net worth increased between 1989 and 2013. Thus, more number of family net worth is less than mean in 2013 as compared with 1989.
This concludes that there is decrease in number of families with extremely high net worth between 1989 to 2013 which makes the distribution as right-skewed.

orchestra answered 2 years ago

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