Anyone care to debunk this?

[andrewducker]

Wealth inequality gap narrowed between 2000 and 2005.

I thought I'd seen figures saying inequality had gone up, but I may have misunderstood something.

Comments

[bracknellexile.livejournal.com]

I suspect it's, as usual, all down to which set of stats you want to use. I don't have any figures to hand (and no time to go look them up alas) but I suspect you'd be able to say something like:

Rate of increase of income (RII) of poor ~ 3x RII Rich (as per the article), so inequality is narrowing. However, I suspect the difference in the average wage of the poor and rich has increased.

And of course, depending on how you define "poor" and "rich" you'll get different results too. Is it the average income of the bottom and top x% of earners? Average income of the bottom and top 10,000 earners? Something else?

I suspect that inequality is in fact both narrowing and increasing at the same time, depending on the politician speaking and the desired spin for today :)

[a-pawson.livejournal.com]

Their conclusions is that the poor are seeing an increase 3 times that of the rich. But the figures used are based on average percentage increase in income.

The conclusion depends entirely on which statistical method is used to interpret those figures. You could easily use the same figures to illustrate the opposite.

To illustrate the point, consider someone who is deemed poor earning say £10k and whose income is increasing by £500 p.a. That's an increase of 5% p.a. Now consider a rich person earning say £1 million per year and whose income is rising by £30k p.a. That increase is only 3% p.a.

So who is seeing the greater increase In terms of hard cash? The answer is obvious, the rich person has an annual increase of £29,500 more than the poor person. But if you want to view it in terms of percentages, as this study has done, the poor person is seeing a greater increase year on year.

If the trend were projected forward, the two groups would eventually earn the same, but this would require a very long timescale.

[andrewducker]

Percentage difference is what I was expecting. Nobody is expecting the poor to grow rich faster in absolute terms - percentage terms will do for now!

[bracknellexile.livejournal.com]

Ok, so working in percentage terms alone, there's a subtle point in the article (and this may be a matter of bad english than correct semantics):

In that time, the growth in the income of the poor has grown three times faster than the rich, the study found.

The "growth in income has grown", not "income has grown". By that definition, the poor could be seeing the rate of increase in their income at, say, 0.3%pa. The actual increase in income may ahve gone from 0.5% to 0.8%.

The rich, by contrast, may have their rate of increase in income stuck at 0.1%pa (the poor's growth of income has grown 3 times faster), but if the rich's growth of income is starting at 5%, then an increase in that to 5.1% still widens the divide in terms of actual growth and absolute wealth. Only the growth in growth is better for the poor.

As I said, it may be bad english on the part of the article writer, but the implication is an extra differential with respect to time to the one you might think it means.

[robhu.livejournal.com]

Cross linkage

[palmer1984.livejournal.com]

Ooh, thanks, I missed this!

[rhythmaning.livejournal.com]

When I heard this on the radio this morning, I thought that last year or so I had read the opposite - that inequality was increasing. I think the reports I remember were something to do with the increase in the Gini coefficient. All I can find on the BBC about the Gini coefficient and the UK is this, which was from 2005. I don't think it was that...

Then there is this, from the Independent - an opinion piece about increasing inequality from September 2007.

debunky-debunk!

[autodidactic.livejournal.com]

You're welcome.