There are three kinds of lies: lies, damned lies, and statistics.
British Prime Minister Benjamin Disraeli
Politicians use statistics in the same way a drunk uses a lamppost – more for support than illumination.
The various means by which politicians can employ statistics to obfuscate an argument are manifold. They are masters of the art.
One of the many “issues” being discussed in the current political debate revolves around “household income.” One would think that the federal government has accurate data about this statistic, and indeed it does. However, even if a politician uses a statistic that is accurate, that “statistic” can be grossly misleading.
Dr. Thomas Sowell recently gave us a brief tutorial on this matter.
[Source: Misleading Statistics, by Thomas Sowell]
When we hear about how much more income the top 20 percent of households make, compared to the bottom 20 percent of households, one key fact is usually left out. There are millions more people in the top 20 percent of households than in the bottom 20 percent of households.
The number of households is the same but the number of people in those households is very different. In 2002, there were 40 million people in the bottom 20 percent of households and 69 million people in the top 20 percent.
A little over half of the households in the bottom 20 percent have nobody working. You don’t usually get a lot of income for doing nothing. In 2010, there were more people working full-time in the top 5 percent of households than in the bottom 20 percent.
Household income statistics can be very misleading in other ways. The number of people per household is different among different racial or ethnic groups, as well as from one income level to another, and it is different from one time period to another.
The number of people per American household has declined over the years. When you compare household incomes from a year when there were 6 people per household with a later year when there were 4 people per household, you are comparing apples and oranges
Even if income per person increased 25 percent between those two years, average household income statistics will nevertheless show a decline. When the income of 4 people rises 25 percent, this means that 4 people are now making the same income as 5 people made in an earlier time. But not as much as 6 people made before.
So household income statistics can show an economic decline, even when per capita income has risen.
Thank you, Dr. Sowell.