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With the year that we are having, we were really looking forward to Christmas celebrations, but like many out there, we will spend the time as just our family, with no relatives coming at all. This has left us with a little bit of an issue as our daughter is expecting us to *all open presents,* but my wife and I don't actually have any presents for each other at all, so will have to think of something. What we have decided on is joint presents and just buy and wrap things that we already need anyway, like a toaster. Exciting!

One thing I was hoping to do before Christmas and our move upstairs, is the wardrobe storage system, but due to Covid, that isn't going to happen either. We had decided on a very cheap and easy option from IKEA, that has bars drilled into the wall and hooks that hold shelving, baskets and hanging rods in place - the problem is that they don't have some of the necessary components in stock and they don't really know when they will get some. While they have an estimate, we can't even order what we need and put them on hold, we have to keep checking the stock levels online. 

<center>![OI000947 1.jpg](https://files.peakd.com/file/peakd-hive/tarazkp/98ShzKzy-OI000947201.jpg)</center>

The delivery estimate is over a month away - which is highly unusual for IKEA, but is to be expected for how this year has gone overall - *ridiculously.* So much disruption caused and while things like this are minor in importance at the end of the day, it is an indicator for all of the other factors that have made their way into the new normal, one where people seem to be relatively happy to become accustomed to. 

I was reading an article about how Australians are "sitting pretty" as there has been a 1.7% increase in *average* wealth, but there was no mention about the spread of that wealth. Averages are very poor indicators of reality when like I mentioned a few weeks ago, the 200 richest people in Australia added 25% to their wealth since March. Does that sound average, or is it when the richest 1% or so are adding that kind of percentage gain, the averages are skewed?

The problem that I find with these kinds of articles is that they position the reader with a perspective as if things are going well, but when it comes to averages, The distribution has to be taken into account. For example, imagine a bus with 100 people on it with an average wealth (all assets and holdings) of 1M dollars. What does this really say about the group? To me, it sounds like they are doing pretty well - but if one person gets off that bus and the average drops to 100K, it tells a very different story. While everyone on the bus combined was worth 50M, in reality 99 of them were worth 9.9M and one person was worth 90.1M. This is pretty much what it looks like in most countries, though - the 0.1% don't catch the bus.

The other problem is when we compare ourselves against the average to get an understanding of how we are doing personally. For example, in the US where 70% of the population are overweight and 40% are very overweight - the average weight is likely not going to be what most healthcare professionals would consider "ideal" for health. Yet, a person under average weight could still frame themselves as doing better than the average *and feel good* for it. After all, *it could be worse.*

>"Yes, I am a serial killer who killed five people, but that is half less than the average serial killer, so I am really not that bad of a person and should have my sentence shortened".

But, most of us don't visualize numbers well, so when we hear the averages of the economy and position ourselves along the scale, we might feel good about ourselves. However, the average wealth per capita in Australia is $441,649, which is less than the average price of city homes in every major city in the country, but is close to the bottom set and a little more than the average apartment price except for in Melbourne (20% less than average costs) and Sydney (40% less than average costs). This says that the average Australian wealth doesn't cover most people's home, which makes sense as the home is most people's largest investment, but it takes a long time to actually own it. 

This average is very skewed in my opinion, as while the averages might be up, it is likely being driven by a very narrow proportion of the entire community, likely the rich and the retirees who have actually paid off their houses. I would predict that a far greater majority of Australians don't have anywhere near that wealth and a recent survey found that 70% of Australians had no secondary account set aside for emergency situations. That sounds more realistic, where a lot of people are living far more hand to mouth than the averages would indicate.

I know that for my wife and I, if we were to tally up *together* what we were worth in total, it wouldn't come close to that kind of amount, as the largest asset we have is our house and we only have about 30% ownership of it, considering what we have put in and what we are likely to be able to sell it for if we had to. We are likely below average in Finland however, since there is no inheritance money to bolster our wealth and my wife earns a fair amount under the average salary in Finland - although she is likely actually not that far under average.

<center>http://www.salaryexplorer.com/charts/finland/median-and-salary-distribution-monthly-finland.jpg</center>

While the median salary is 4300, 25% earn less than 2500 - A large gap of 1800€. This is significant, considering the minimum salary is actually 1100€ a month. But, what is even more important is that 25% of the people earn more than 11500, which is 7200 more than the median - that difference alone is almost 3x more than the bottom 25 of employees. This indicates a rapid climb the closer one gets to the top, with a greater degree of spread between people. so, while the median salary might be 4320, it doesn't actually mean that the average person earns anywhere near that number. 

so, if for example we do some janky math with 100 people using the average between the limits.

25 people earn 1800
25 people earn 3400
25 people earn 7950
25 people earn 16250

25x1800= 45,000
25x3400= 85,000
25x7950= 198,750
25x16250= 406,250
Monthly total = 735,000 earned per month

This means that the "average salary" of the 100 people is 7350€ per month. Which is 7x more than minimum salary. 3x more than the upper limit of the lowest 25%. 70% more than the upper limit of the bottom 50% (the median) and 50% less than at least 25% of the population at the top. This math is inaccurate for sure, but you get the idea. 

Or put another way. per month in salary earning:
25% generate 1/16th
25% generate 1/9th
25% generate 2/7th
25% generate 3/5ths

Now as a reminder, these are *salary earnings* - not what these groups will also earn through investments. As you could likely assume, the upper brackets are likely more invested to passively earn than the lower. Salary and wealth are different animals. 

As I see it, even the "median" salary is not going to give an accurate portrayal of just how much variation there is between earnings and it definitely doesn't tell about the variation in life experience. In a country as expensive as Finland, the differences are large, yet, in other countries I suspect there is a far greater variation between the numbers. But, some people seem to use these types of averages as indicators of standards, but I am not sure how useful they are at the practical level. In many ways, it is like the images depicting "Expectation vs Reality" - where the expectation paints a pretty picture, the reality is something altogether different.

While it is easy to accept articles that use numbers and averages to support their story, I think it is wise to take them all with a grain of salt, as while the numbers might be accurate, they don't necessarily provide a lot of information on where things currently stand. I suspect that the increase in Australian average wealth is due to a minority percentage increasing their value significantly over the last 9 months through increases in investments and the value of their properties, but the *average Australian* is likely not sitting quite as pretty as the media will have us believe. 


Taraz
[ Gen1: Hive ]



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