Wednesday, October 17, 2007

Statistics for Pundits

The Washington Post's attractive conservative, George Will --

Under the [health insurance] bill that Democrats hope to pass over the president's veto tomorrow, states could extend eligibility to households earning $61,950. But America's median household income is $48,201. How can people above the median income be eligible for a program serving lower-income people?

This point goes around so many times so let's keep it simple. Suppose that the economy has 100 people and total income is $200. Suppose that 99 of the 100 people make $1 and the 100th person makes the remaining $101. One might reasonably define "lower income" as making $1. After all, there's one dude in the economy making more than everyone else combined. So in this setup, you can go all the way up to the 99th percentage point of the income distribution and still find a lower income person. Not just up to the 50th.

That's an exaggerated example. But that's America. The income distribution is so skewed that one can be well above the median and still not that well off.

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