Tuesday, August 23, 2011

Missing Data

Karl Smith has a post up about the Lesser Depression and why it "feels" different than previous ones. He points out that the loss of jobs, not the loss of real wealth, is the reason this one is so bad. He puts in a bunch of graphs that show that wealth per person, even adjusted for inflation, is higher today than it was during the boom years of the 1990s.

He says:
"The reason this time is so painful is because there is a dearth of jobs, not value... lack of jobs is why everyone feels bad, not because they have less or are poorer..."
Well, there's a missing data set that I think would probably implode Smith's observation and that's the income distribution in this country. We all know the rich have gotten richer, the poor have lost jobs and the middle class has stayed the same. I don't have time to go out and find the full data set for the chart below (hey, the 2010 census results should be up in a year or two) but what do you want to guess we'll see that the 80th percentile and lower groups will have remained flat on their incomes?

When Smith says that everyone feels bad, "... not because they have less or are poorer..." I think he's seriously wrong. Most of us do have less in real dollar terms than we did in 2000, while the rich have a ton more and the poor have no jobs. That's why we feel bad. 

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