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Mark Perry on Income Differences

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There’s recently been a huge outpouring of data-rich analyses of studies of the statistics on income differences in the U.S.  And one of the best is supplied by Mark Perry over at AEI’s Enterprise Blog. [2]  (Be sure also to click on each of the many links that Mark has in this post.)

Note that on a per-household-earner basis, the average income in 2010 for households in the top quintile was only 3.28 times larger than the average income for households in the lowest quintile.  That is, if you divide the income earned by each earner in the average household in first the bottom, and then in the top, quintile, you get $11,034/0.42=$26,271 and $169,633/1.97=$86,108.

While $169,633 is 15.37 times larger than $11,034, $86,108 is only 3.28 times larger than $26,271.  In other words, while the average household income for households in the top quintile is 15.37 times larger than the average income of households in the bottom quintile, average per-household-earner income for households in the top quintile is only 3.28 times larger than is average per-household-earner income for households in the bottom quintile.

Looked at in this way, the “inequality” is revealed to be much more modest.

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