Monday, September 27, 2004

Fighting Myths with Facts


Liberals and deluded economists (the same thing) constantly decry the fact that one-fifth of the nation's households are in the lowest 20 percent of the income distribution. (A quasi-intellectual joke -- get it?)

Anyway, there's this clamor for someone (namely taxpayers) to do something (namely redistribute income or simply tax higher earners to provide expensive and needless training, healthcare, and daycare programs for low earners). Many sensible economists (a rare breed) know better. They know two important facts:

1. There's a lot of up and down movement in the distribution of incomes.

2. Even those who stay near the bottom of the income distribution are a lot better off than they used to be.

The first pont is illustrated by these data* from a panel of families surveyed in 1975 and again in 1991 (income quintile in 1975 and percentage that had moved to the top two quintiles in 1991):

Lowest Fifth - 59% moved to the top two quintiles

Second Fifth - 52% "

Middle Fifth - 49% "

Fourth Fifth - 70% remained in the top two quintiles

Highest Fifth - 86% "

The second point is illustrated by this** graphic:

* Source: Myths of Rich & Poor, W. Michael Cox and Richard Alm, via Arnold Kling, writing at Tech Central Station.)

** Source: The Washington Post, via Wizbang.