2016 Sept 6^th

Thomas Sowell instructs us today about statistics; although perhaps it would be better to say he warns us about statistics. He begins by citing Mark Twain’s well-worn warning that there are lies, damned lies and statistics. There is also the equally well-worn comment that you can prove anything with statistics. That’s true, but only if you are directing your argument at someone who knows nothing about statistics.

Sowell begins with examples of what he considers misleading data using household statistics. He points out, correctly, that the top  20 percent of households have more income than the bottom 20 percent of households, Then goes on to claim, again accurately, that there are many more people in the top ten percent of households than in the bottom ten percent. The implication, of course, is that this increased income in the top ten percent is due to the increase in the number of people in the top households.

It is true that household incomes increase with the number of household inhabitants but the relationship is certainly not linear. Once households get above six members the total household income goes down, hardly a surprise.

Sowell writes, “A little over half of the households in the bottom20 percent have nobody working. You don’t usually get a lot of income for doing nothing. In 2010 there were more people working fulltime in the top 5 percent of households than in the bottom 20 percent.”

That “over half of households in the bottom 20 percent have nobody working” might possibly be due to the fact that these households consist of single retirees living on Social Security and some savings. Other households in this group might be physically incapacitated and living on Supplemental Social Security. Sowell cannot imagine any such thing. From his comments, it is clear that he believes households in the bottom 20 percent are there due to laziness. He suggests no other reason.

Twenty-seven percent of all households in this country are one-person households. Their median income is just over 27 thousand dollars; for two person households the income is just over 58 thousand dollars. The median household income in this country is 51 thousand dollars but the median family income, which eliminates one-person households, is 62 thousand dollars.

Should Sowell be interested, these data were provided by Danielle Hale, Director of Housing Statistics, Economists Outlook.