Kerby Anderson

What does the average American worker make each year? This is a question that a professor at the University of Pennsylvania’s Wharton School of Business asked of her students. The school is one of the top three business schools in the country, so you would assume the students are some of the best in the country. Last month I saw her Twitter post and was shocked. A quarter (25%) of the students thought the average income was over six figures. One of the students thought the average was $800,000 a year. Let’s hope that student was just being outrageous to get a laugh from the rest of the class. The professor concluded that people are notoriously bad at making this kind of estimate. When I went back to the original tweet, I noticed a significant number of comments in the thread. The Wharton professor in her tweet explained that the average income for American workers is $45,000. I was sure that number was low, and I was right. One tweet by an investment officer documented that the true median income is $52,520. He then noted that if a Wharton professor was off by that much, perhaps we shouldn’t expect much from these students. The student estimates were too high. The professor’s estimate was too low. Another tweet mentioned that these faulty estimates seemed to match the inaccurate estimates given by New York City mayoral candidates for the price of a home in Brooklyn. Some estimated that the cost was around $100,000. Eric Adams, who won the election and is currently serving as mayor, guessed $550,00. The actual price is $900,000. Apparently, students aren’t the only people with a poor ability to make accurate financial estimates. Perhaps we should expect more from candidates and elected officials.