Monday, October 03, 2011

What they "know"

Google's Ngram only takes us to 2008.  But in a 2000-2008 plot of envy, lust and greed, they all rise steadily with envy on top, lust second, and greed third (almost flat).

This may be surprising.  Some of the popular discussions (and "news") that we hear the most about have to do with distributions of income and wealth (although the two are often confused).  These discussions can be painful to listen to for many reasons.  They are emotional/political.  The key variables are very hard to measure.  There is disagreement on what to measure.  The terms are vague ("fairness", "equity", "justice", etc.) and mostly used for rhetorical effect.  Comparing "snapshot" distributions (over time or between places) is easiest, but wrong and misleading because people move (up as well as down, in and out). 

Many of these problems are taken up in this Russ Roberts discussion with Bruce Meyer.  It turns out that if the many data difficulties are actually addressed, the increasing inequality conclusion (which almost everyone "knows" to be true) may not hold at all.  The "declining middle class" idea also may be wrong.

Will Rogers was right.  It's not what people don't know.  It's all the things they "know" that are wrong.


Tom Heller emails me that it was Artemus Ward, not Will Rogers, who I should cite.  Thanks, Tom.   Mark Twain also expressed similar sentiments.