Sunday, October 26, 2008

Census: Income Inequality Unchanged Since 2000

From the Joint Economic Committee of Congress:

According to a key Census Bureau measure, income inequality has been unchanged since 2000. The Census Bureau recently confirmed that no statistically significant change in the inequality measure occurred between 2000 and 2007 (see chart above), the last year for which data are available. The measure referred to here is known as the Gini coefficient, a standard gauge of income inequality published by the Census Bureau and widely used by economists and other researchers (Gini coeffients data here for households and families).

When examining income data for different groups over time it should be recalled that there is a good deal of income mobility between income groups, and membership of various income groups changes significantly over extended periods of time. For example, a household that was in the middle fifth in 1985 is probably no longer in that group now. As a result, changes in the middle fifth’s average income between 1985 and 2005 aren’t a good reflection of the changes in the economic well-being of a household that left that income group years ago. Nearly half of all households move to a different fifth in as little as three years.

Also, inequality in consumption is much less than inequality in income. For example, the level of consumption in the bottom fifth is nearly twice that of income, indicating that income is not necessarily the best measure of economic well-being. Congress will have to carefully consider these data and other relevant statistics in order to make informed policy decisions.

31 Comments:

At 10/26/2008 10:57 AM, Anonymous Anonymous said...

Congress doesn't (and won't) give a rat's ass about these or any other numbers...oh, except the votes it takes to keep them in office.

Do you ever feel like you're preaching to the choir?

 
At 10/26/2008 12:35 PM, Anonymous Anonymous said...

As much as liberals state that they want "change", in fact, they can't handle it. They believe that the world will end because the climatic temperature may change (in what year was the world's climate ideal?). They love to use class envy to achieve their goals; pitting us against each other as rich vs poor, young vs old,(race, culture, whatever works to expand their control). Your point is well made that one's economic group is not a constant. I once was a member of the laborer's union earning $2.75 per hour. After two tours in Vietnam, I used the GI bill to help with college; then an academic scholarship to help with professional school. My income went from less than $10,000 per year to about $150,000 per year, and I got older. I'm still the same person, so I fit in the poor/rich, young/old categories having experienced all the intermediate stages as well. Statistical inequalities have little meaning without consideration of the opportunity for growth and advancement. Instead of focusing on equality of opportunity, liberals would prefer static, easily-controlled groupings with them being the royalty at the top overseeing this medieval-like regressive society.

 
At 10/26/2008 1:07 PM, Blogger Arman said...

"For example, the level of consumption in the bottom fifth is nearly twice that of income, indicating that income is not necessarily the best measure of economic well-being."
Is this stating that spending more than you are able to maintain is a sign that your economic well-being is actually better than your income would indicate???
Some consumption is based on hope for a better tomorrow. Consumption is in some instances a measure of hope, but it is not a measure of reality.
"this medieval-like regressive society."
Democracy is not regressive! The ideal that all men are equal is the foundation of all that is good in America. The ideal of capitalism, that all men are unequal is a juxtaposition to democracy. It is the genius of the right-wing propaganda that confuses the terms of capitalism, republicanism, democracy and socialism in order to keep the masses complacent.
"They love to use class envy to achieve their goals; pitting us against each other as rich vs poor, young vs old"
And right wing promotes the entities of business over individuals, and the hierarchy of wealth over the equality of people.

 
At 10/26/2008 1:25 PM, Blogger PeakTrader said...

Obama's Cabinent Almost Complete:

Secretary of State: Kofi Annan

Secretary of Treasury: Warren Buffett

Secretary of Defense: Evander Holyfield

Attorney General: O.J. Simpson (will be released from prison)

Secretary of Interior:

Secretary of Agriculture: Oprah Winfrey

Secretary of Commerce:

Secretary of Labor:

Secretary of Health and Human Services (and also the "white folks" representitive): Richard Simmons

Secretary of Housing and Urban Development: Marion Barry (Mayor of D.C. in spite of being convicted of drug charges).

Secretary of Transportation: Speedy Gonzales

Secretary of Energy: Bill Rogers

Secretary of Education: Bill Cosby

Secretary of Homeland Security:

FBI Director: Snoop Dog
New Fed Chairman: Paul Krugman
Ambassador to Mexico: Fernando Valenzuela aka Fernandomania.

Obama will buy Michael Jackson's Neverland ranch, since he had $200 million left over from his campaign, and people will call the western White House Obamaland, unless he changes his name to Muhammad Ali.

John McCain will live in an old folks home, while Sarah Palin will shovel snow for a living. Ben Bernanke will attempt to understand Obamanomics, but fail.

The following team will report Obama's White House years:

Director: Oliver Stone

Assistant director: Michael Moore

 
At 10/26/2008 1:44 PM, Blogger Arman said...

And what is that nonsense about? Is it real? Is it funny? Is it supposed to be inflammatory? Or is it just what it appears to be... stupid.

 
At 10/26/2008 2:35 PM, Blogger bobble said...

"Also, inequality in consumption is much less than inequality in income. For example, the level of consumption in the bottom fifth is nearly twice that of income . . "

does this mean that if you take out a second mortgage for $10,000 to 'consume' something, that's 'income' and moves you up then income equality scale?

if so, that's not really my understanding of 'income equality'

please elucidate :o]

 
At 10/26/2008 2:40 PM, Blogger gadfly said...

Arman ...

The first piece of nonsense that I read was your nonsensical argument that Democracy guarantees equality while capitalism prevents equality.

The concepts of Democracy and Capitalism encourage equal opportunities but neither guarantee equal outcomes.

Your statement that "the level of consumption in the bottom fifth is nearly twice that of income" is bereft of reason and represents an unsustainable economic condition.

You should pay more attention when reading Professor Perry's blog.

 
At 10/26/2008 4:02 PM, Anonymous Fred said...

"And right wing promotes the entities of business over individuals, and the hierarchy of wealth over the equality of people."

You are getting straw all over my keyboard.

 
At 10/26/2008 9:57 PM, Blogger EJB said...

The reason why consumption is higher then income is two fold.

1. the income statistics don't take into account transfer payments from government.

2. the lowest quintile has many people who are there only temporarily. Friedman showed that people make spending decisions based on long term expectations of income and not temporary ups and downs. People who are laid off, temporarily out because of illness, quit their jobs etc, who have low income for a year, continue to spend drawing down savings or temporarily taking debt. That why most of the people who are in the lowest quintile in any given year don't stay there for very long.

 
At 10/26/2008 11:48 PM, Anonymous qt said...

What about looking at the folks moving down in income like Kirk Kerkorian whose $14.8 Billion dollar stake in MGM Mirage is now worth $1.4 Billion.

Great news for income inequality warriors everywhere...except for the ones who are looking for rich folks to tax.

 
At 10/27/2008 1:42 AM, Anonymous Anonymous said...

Reasons why people in the bottom quintile don't stay there very long:

Many are teens and young adults not yet fully employed. Getting a full time job at minimum wage will lift them into the second quintile.

Many are retirees in old age - when you follow up 9-10 years down the road, many of them will have exhibited Keynesian tendencies.

Many are there temporarily due to gaps in employment - they may be laid off, temporarily disabled, starting a new business, or just taking time out.

 
At 10/27/2008 3:53 AM, Blogger Arman said...

gadfly
"The concepts of Democracy and Capitalism encourage equal opportunities "
That you lump Democracy and Capitalism together means that you do not understand one of the concepts, or you understand neither of the concepts. Capitalism is the way that business runs. It in no way shape or form encourages equal opportunity. You cannot shop in my store unless you have the money to buy something. You cannot live in this neighborhood unless you have enough money. If you don't have enough money then you are worthless and I don't have to put up with you in my business or in my neighborhood.
Democracy is about an equality of man, and the equal worth of a man's life. Every man should have equal persuasion in a democratic system, regardless of his abilities or ideals. In a real democratic government, it doesn't matter how much money you have, your say through your representative should carry as much weight as the next man.

"Your statement that "the level of consumption in the bottom fifth is nearly twice that of income" is bereft of reason and represents an unsustainable economic condition."
The statement isn't mine! I quoted it from the blog and questioned the rationale causing Parry to state this!!

"You should pay more attention when reading Professor Perry's blog."
And you should pay more attention to the statements that you are criticizing

 
At 10/27/2008 3:57 AM, Blogger Arman said...

The reality remains, if your consumption is in excess of your income, then you are not in a better position than what your income would indicate... and given that this is a measure of the rich/poor gap, I should really hope that the compilers of the graph should not exclude welfare payments and the like in the computations.

 
At 10/27/2008 4:02 AM, Blogger Arman said...

"You are getting straw all over my keyboard."
Dismissing arguments with catchphrases does not dispute the facts of the argument or reinterpret the facts. This is what economics really teaches you to do... to dismiss arguments without arguing.

 
At 10/27/2008 6:58 AM, Anonymous Alex said...

arman, your "argument" was merely to marginalize all of the "right-wing" (without defining the term) as being in bed with big business and wanting to promote its interests over the "equality" of everyone else. That is such a laughable "argument" one doesn't even know where to begin.

I mean when you say something as far-fetched and grossly undefined as that, it's hard not to just dismiss it as a non-serious straw-man argument.

 
At 10/27/2008 12:36 PM, Blogger DB said...

"I mean when you say something as far-fetched and grossly undefined as that, it's hard not to just dismiss it as a non-serious straw-man argument."

Alex...well, said!
db

 
At 10/27/2008 2:34 PM, Blogger Arman said...

>"right-wing" (without defining the term)
I really didn't think that this needed definition. Do you not consider yourself to be right wing? Do you not have a clear idea as to what that means? I mean, this is your identity and so for you to define. If I make a statement that you think is in error on the meaning of right wing, it is certainly in your prerogative to correct me, but it is not for me to define who you are.

 
At 10/27/2008 4:03 PM, Anonymous Anonymous said...

"Do you not consider yourself to be right wing? "

I never heard Alex identify himself as such. For the record, I am not fond of wings...more of a breast man, myself.

 
At 10/27/2008 4:10 PM, Anonymous alex said...

Personally, I consider myself to be conservative/libertarian, and I don't find that to be one in the same with the term "right-wing," which to me seems alot more militant and socially involved.

But let's assume your definition of "right-wing" is one in the same with conservative. Do you honestly believe that conservatives want to promote some hierarchy of business and rich people at the expense of the equality of everyone else?

Of course, you haven't even defined in what context you're using the word "equality." Are you referring to individual/civil rights, or are you referring to income equality?

 
At 10/28/2008 3:42 AM, Blogger Arman said...

"Do you honestly believe that conservatives want to promote some hierarchy of business and rich people at the expense of the equality of everyone else?"
It is not a hierarchy of business, but a hierarchy of wealth coupled with a promotion of business. Take these bailouts. The focus of the right is to protect and promote business. It is deemed important to the average man that business thrives, but business thriving does nothing for the average man. It is from the wealth of the average man that business thrives. They get the cart before the horse. Government promotion and protection of business is completely wasted effort and money.
The hierarchy of wealth basically means voting with your wallet as your libertarian stance espouses. Even without the extremism of libertarianism, lobbyists are constantly subverting democracy by wining and dining and buying OUR representatives. These means that government is NOT democratic, but authoritarian on the authority of the dollar.

 
At 10/28/2008 5:19 AM, Blogger OBloodyHell said...

> Democracy is not regressive! The ideal that all men are equal is the foundation of all that is good in America. The ideal of capitalism, that all men are unequal is a juxtaposition to democracy. It is the genius of the right-wing propaganda that confuses the terms of capitalism, republicanism, democracy and socialism in order to keep the masses complacent.

Well, arman, they've certainly confused you, since you don't have the slightest clue what the hell you are talking about. What else is new?

a) This country is not, nor was it ever intended to be, a democracy. It's quite clear that the founders expected and intended for voters to be responsible and concerned citizens with a long term interest in the well-being of their nation and an understanding of the pitfalls of the various governmental systems. The USA of the Founding Fathers was as close to 100% literacy as it's ever been, and far, far above what it is today. Likewise, the capacity for critical thinking has suffered woefully, as any graduate of modern public schools such as yourself provides such a sparkling example of this failure to produce. Yet another reason we were never intended to be a democracy, but a republic. They had already seen for themselves, in their studies of history, what democracies led to -- "Bread and circuses".

"That all men are created equal". This refers to equality of opportunity, not equality of outcome. "You buys your ticket and you takes your chances" Learning to play the game better is one of the benefits of the system.

You're right -- capitalism isn't about equality.

It's about FREEDOM.

The freedom to choose who you work with, and for, and for how much. The freedom to choose what you pay for, and how much you pay.

And since this is granted to EVERYONE by a free market, the real value of all things -- those things you own, those things you create, those things you want, those things you buy, and that includes the very labor you place into things -- is determined... not by some bureaucrat's fiat, but by all the millions of voluntary choices made by all the people out there.

"I'd rather have my time than that money".

"I'd rather have my money than that object"

"I'd rather have that object than my money"

"I'd rather have that money than my time".

All voluntary. Freely chosen, within the bounds the universe allows.

It's only when you get governments involved that FREEDOM goes out the window, because governments, and governments alone, have the power to apply "legitimized coercion".

The problem with democracy is that it is, indeed, regressive, because, once the people reach a tipping point, where a majority grasp that they can vote themselves largesse from the public trough with no visible cost to themselves, and all self-responsibility for them is gone, they invariably do so.

And we appear to be getting very close to that tipping point, if we haven't past it already.

If people fall for the Obama lie, then we'll know the answer for that question.

 
At 10/28/2008 5:27 AM, Blogger OBloodyHell said...

> Great news for income inequality warriors everywhere...except for the ones who are looking for rich folks to tax.

qt: money doesn't just disappear.

Someone still has the other 13.4 billion. It's just someone who made a (possibly unobvious) smarter choice than Kerk Kerkorian.

The only way all people can actually be losing money is through either actual destruction of property (as on 9/11, or via actual consumption such as food) or through inflation (i.e., a false expansion of the money supply rendering the actual value of cash in-hand lower).

Total Real Wealth can only increase.

 
At 10/28/2008 5:29 AM, Blogger OBloodyHell said...

> Do you not consider yourself to be right wing? Do you not have a clear idea as to what that means?

Arman, do you not have your head up your ass?
Do you not have a clear idea as to what that means?

My God, you are such a dunderhead.

 
At 10/28/2008 4:10 PM, Blogger Arman said...

You're right -- capitalism isn't about equality.
It's about FREEDOM.
The freedom to choose who you work with, and for, and for how much. The freedom to choose what you pay for, and how much you pay.

You use the word freedom in a way that has no meaning.
You are not free to work just anywhere. You are not free to pay just anything. You are not free to take just anything and shop just anywhere. All these things are strictly determined by what you can do and how much you can pay. It is hierarchical, and in absolutely no way conveys any kind of equality of oportunity.
You are free to say whatever is you believe to be true, although that freedom is constantly eroded on political correctness.

qt: money doesn't just disappear.
Yes it does. Money is the credit of the bank, and when banks contract their lending activities, the money just does disappear. Do you not understand what money is?

 
At 10/29/2008 12:36 AM, Anonymous poor boomer said...

obloodyhell said:

a) This country is not, nor was it ever intended to be, a democracy. It's quite clear that the founders expected and intended for voters to be responsible and concerned citizens with a long term interest in the well-being of their nation and an understanding of the pitfalls of the various governmental systems.

Yes, and the founders also expected and intended for the poor to be excluded from voting and participating in the well-being of their nation. The founders expected and intended for the poor to be subservient to those who would rule them.

 
At 10/29/2008 12:40 AM, Anonymous poor boomer said...

obloodyhell said:

And since this is granted to EVERYONE by a free market, the real value of all things -- those things you own, those things you create, those things you want, those things you buy, and that includes the very labor you place into things -- is determined... not by some bureaucrat's fiat, but by all the millions of voluntary choices made by all the people out there.


Unfortunately, the poor are denied free market choices that would allow them to buy real property and build wealth.

Many of the "voluntary" choices of the poor are made under duress, because the poor are denied by government free market choices they would prefer.

 
At 10/30/2008 12:10 PM, Anonymous Anonymous said...

"Unfortunately, the poor are denied free market choices that would allow them to buy real property and build wealth.

Many of the "voluntary" choices of the poor are made under duress, because the poor are denied by government free market choices they would prefer."


Biggest load of fucking horseshit ever. My dad grew up dirt poor, on his own since 16. Put himself through high school working part time, joined the navy, got out and into business for himself. I didn't go to "rich kid" school...graduated an average student from a rural La. high school. But I went into the Army, used the GI Bill to get an education and improved my potential for employement and income.

I know far too many stories like those. If the poor have fewer choices, it's because they are either lazy or apathetic. I suspect both. In the Keynesian Welfare Nation State, poor people have just come to expect that Uncle Sam (translation: those of us tax payers who did care enough to bust our asses and increase our income potential)will wipe their ass and make sure they got something to eat.

 
At 10/30/2008 11:06 PM, Blogger Arman said...

"Biggest load..."
You are talking about life in the US, where there are opportunities not normally provided in less democratic countries. You are in a place where your high school tuition is not dependent on your parents ability to pay... where your military service has a pay beyond what you can plunder... not strictly dependent on your ability and aggression. It is our democratic input into our government that gives to us opportunities that far surpasses what our parent's situation would allow, what our ability to pay would allow. Capitalism does not allow ANY equality of opportunity, but ONLY allows for INEQUALITY of opportunity.

"The problem with democracy is that it is, indeed, regressive, because, once the people reach a tipping point, where a majority grasp that they can vote themselves largesse from the public trough with no visible cost to themselves, and all self-responsibility for them is gone, they invariably do so."
And so THAT is why America, with the democratic foundation like no other country in the world is such a dismal failure, right?
The authoritarianism you promote is in no need of protection. It is the DEMOCRACY that you guys campaign against that is fragile and unique, and in need of protection from foolish propagandists like you.

 
At 11/05/2008 8:51 PM, Anonymous Anonymous said...

While unchanged over the last several years, below is a sorted table from the CIA Factbook. Perhaps someone will offer why the US GINI nubmer is something we should happy about when we comapre to other countries.
Country GINI
Sweden 23
Denmark 24
Slovenia 24
Iceland 25
Austria 26
Czech Republic 26
Finland 26
Luxembourg 26
Slovakia 26
Bos. Herz 26
Albania 27
Belgium 28
France 28
Germany 28
Hungary 28
Malta 28
Norway 28
Croatia 29
Cyprus 29
Belarus 30
Ethiopia 30
Kosovo 30
Montenegro 30
Serbia 30
Kyrgyzstan 30
Kazakhstan 30
Australia 31
Pakistan 31
European Union 31
Netherlands 31
Romania 31
Ukraine 31
Bulgaria 32
Ireland 32
Spain 32
Canada 32
Tajikistan 33
Mongolia 33
Greece 33
Italy 33
Moldova 33
Bangladesh 33
Yemen 33
Switzerland 34
Estonia 34
United Kingdom 34
Egypt 34
Laos 35
Tanzania 35
Korea, South 35
Algeria 35
Lithuania 36
Poland 36
New Zealand 36
Indonesia 36
Azerbaijan 37
Benin 37
India 37
Uzbekistan 37
Armenia 37
Vietnam 37
Latvia 38
Timor-Leste 38
Guinea 38
Japan 38
Portugal 39
Israel 39
Jordan 39
Macedonia 39
Malawi 39
Mauritania 39
Mauritius 39
Ghana 39
Burkina Faso 40
Morocco 40
Tunisia 40
Mali 40
Georgia 40
Turkmenistan 41
Russia 41
Senegal 41
Cambodia 42
Thailand 42
Burundi 42
Nicaragua 43
Guyana 43
Turkey 44
Nigeria 44
Iran 45
Kenya 45
Cameroon 45
Cote d'Ivoire 45
United States 45
Uruguay 45
Jamaica 46
Uganda 46
Philippines 46
Ecuador 46
Malaysia 46
Rwanda 47
China 47
Nepal 47
Mozambique 47
Madagascar 48
Venezuela 48
Argentina 49
Costa Rica 50
Sri Lanka 50
Zimbabwe 50
Gambia, The 50
Swaziland 50
Niger 51
Zambia 51
Mexico 51
Papua New Guinea 51
Dominican Rep 52
Peru 52
Singapore 52
El Salvador 52
Hong Kong 53
Colombia 54
Honduras 54
Chile 55
Guatemala 55
Panama 56
Brazil 57
Paraguay 57
Bolivia 59
Haiti 59
Cent African Rep 61
Sierra Leone 63
Botswana 63
Lesotho 63
South Africa 65
Namibia 71

 
At 11/11/2008 3:24 PM, Anonymous Anonymous said...

Does the Gini coefficient capture the inequality between the top one percent in income compared to the rest of us? I will quote from the report "Estimating Trends in U.S. Income Inequality..." found at http://www.ces.census.gov/index.php/ces/cespapers?limit=10#table, : "Using internal and public use March Current Population Survey (CPS) data, we analyze trends in US income inequality (1975–2004). We find that the upward trend in income inequality prior to 1993 significantly slowed thereafter once we control for top coding in the public use data and censoring in the internal data. Because both series do not capture trends at the very top of the income distribution, we use a multiple imputation approach . . . Doing so, we find income inequality trends similar to those derived from unadjusted internal data. Our trend results are generally robust to the choice of inequality index, whether Gini coefficient or other commonly-used indices. When we compare our best estimates of the income shares held by the richest tenth with those reported by Piketty and Saez (2003), our trends fairly closely match their trends, except for the top 1 percent of the distribution. Thus, we argue that if United States income inequality has been substantially increasing since 1993, such increases are confined to this very high income group."

 
At 11/11/2008 3:38 PM, Anonymous Anonymous said...

Furthermore,also from the CES 08-25 August, 2008 report: "Because of the censoring in the internal CPS data, even our extended cell mean series does not incorporate information about the very highest incomes. To address this issue, we use a multiple imputation approach . . . Using the augmented internal data, we investigate the extent to which the systematic exclusion of the top part of the distribution affects estimates of the level and trends in inequality. Unsurprisingly, we find that compared to estimates derived from the multiple imputation approach, the unadjusted internal data as well as the consistently censored public use and internal data all understate the level of inequality in all years. However, all the 3 series reveal the same trends: an increase in inequality over the entire period 1975–2004, but with a rate of increase noticeably lower after 1993 compared to before 1993."

 

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