Estimating household net worth accurately
Posted by StratoDem Analytics Research Team on 9/15/17 8:00 PM
Estimating average household net worth is notoriously difficult.
But understanding net worth profiles for target markets is critical for optimizing marketing and investment decisions, particularly in high-cost categories involving real estate.
Fortunately, the Federal Reserve Bank has a rather rigorous process to estimate average household net worth, but unfortunately, their data comes out only every three years.
Some of the leading third-party providers of local-market economic and demographic data attempt to estimate household net worth, but they miss by a mile. Given the variability of the economic environment and housing market on a national and local level, some of those third-party data providers have average error rates of 30–40%.
Soon, the Federal Reserve Bank will release their data for 2016.
The leading third-party provider estimates that the median household net worth for 2016 is $60,000. StratoDem Analytics estimates it will be a handful of percentage points away from $100,000. That’s a huge difference.
We’ll compare estimates again as soon as the Federal Reserve Board releases their 2016 data. Our bet is that the era of data science has ushered in a dramatic difference in accuracy compared to prior-generation data providers. We’ll see shortly…