Friday, June 27, 2008


Thomas Sowell on income inequality:
Desperate efforts to depict all the prosperity and progress in the United States as being monopolized by “the rich” have led to all kinds of statistical mumbo jumbo, such as comparing the changing ratios between statistical categories over time and ignoring the fact that most of the people in those categories move from one category to another over the years.

Studies that follow given individuals over time show the exact opposite of what is being said in the mainstream media and in politics. That is, most of the working people in the bottom fifth of income distribution rise into the top half, and the rate of increase of their incomes is greater than that of most of the people initially in the top fifth. Those individuals in the top one percent, as of a given time, actually have an absolute decline in income over time. As they drop out of the top one percent, they are replaced by others, so the statistical category can be doing great, while the flesh-and-blood people who pass in and out of that category are by no means gaining on those further down the income distribution.

None of this is rocket science. But most people in politics, in the media, and in academia still insist on using statistics based on the fate of abstract categories over time — households, families, income brackets — even when other statistics, based on following specific individuals over time, are available.

Households and families vary in size from group to group and are generally declining in size over time, but an individual always means one person. Income per household or family can be stagnant, or even declining, while income per person is rising.


OBloodyHell said...

> Income per household or family can be stagnant, or even declining, while income per person is rising.

Sure. If a family is at a "satisfaction level" for the entire household, a rise in income by the "main breadwinner" allows the "second income" to cut back worktime or even switch to a poorer-paying but more personally rewarding job.

Because they can.

Dr. Warren Farrell writes on this general topic some, where it applies to males and females in our society.


Assistant Village Idiot said...

I want to be Thomas Sowell when I grow up.