Estimating household net worth accurately

September 15, 2017

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…

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