What does standard deviation mean in this case? Suppose that someone was collecting samples and he was trying to estimate the average amount of money people spend on purchasing fast food meals. The calculated mean was USD 50 and the standard deviation was USD 7. I want to know the right meaning of standard deviation from the below answers because I understand the definition but I don't know how this can be applied or what is the benefit of SD in real life.

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*Does SD show that, on average, people spend between USD 43 and USD 57 on meals?

*Or, on average, they spend USD 50 per purchase but their purchase amount has a relatively large standard deviation of USD 7?

*Or, on average, they spend USD 50 per purchase but my estimate has a relatively large standard deviation of USD 7?


Standard deviation refers to the distribution of the data (or the distribution from which the data were drawn).
Standard error refers to estimating a parameter.
It is not quite right to say that people tend to spend between 43 and 57, but that is closer to the correct interpretation. Some of the confusion comes from the fact that the terms have similar names and that beginning students only see the standard error of the mean, the calculation of which involves the standard deviation. However, you can have a standard error of any parameter you estimate, and the calculation may not involve the standard deviation of the distribution (such as a correlation coefficient).
