Robert Vienneau wrote: > > Once upon a time Mr. Blair told some of us about on-line data at: > > http://www.census.gov/pub/hhes/income/histinc/f03.html > > One can use that data to construct the following graph: > > Percent change in mean real family income > by quintile from 1970 to 1995. > > | 42% > | ______ > | | | > | | | > | 22% | | > PERCENT | ______+ | > INCREASE | 12% | | | > | ______+ | | > | 3.8% | | | | > | 1st +------| | | | > |______|______+______+______+______+ > ------+ 2nd 3rd 4th 5th > -0.4% > QUINTILE > > The data at the above link does not go back far enough. However, > if one had the data, one would find the corresponding graph for > the period from 1945 to 1970 looks something like the following: > > Percent change in mean real family income > by quintile from 1945 to 1970: > > | > | > | > | > |------+ +------+ +------+ > PERCENT | +------+ +------+ | > INCREASE | | | | | | > | | | | | | > | | | | | | > | | | | | | > |______|______+______+______+______+ > 1st 2nd 3rd 4th 5th > > QUINTILE > ...... > > But despite this churning, overall rates of mobility in the United States > have not changed over time. ... Robert, I am disappointed with you. I thought you had learned something, but I was wrong. After the Schumpeter Hotel and the game of Monopoly, you STILL don't get it. Since you like the staircase vs picket fence image, I will try that. The CHANGES from prior to 1970 vs since then are shown to be a picket fence vs a staircase. Correct. This means the GAIN in the upper quintiles has been larger than in the lower quintiles since 1970, while before 1970 the gains were about equal in each. And it is income that is shown, not total wealth or social status (however that is measured). An aside as to WHY this change: A- Immigration was changed in 1965 to admit more immigrants and also to change the kind of immigrants. Before 1965 there were relative few and they were (on average) more educated than the native born population. Since 1970, there are more immigrants and they are less educated than the native born. About one new worker in 3 is now an immigrant. B- The bull stock market. Starting in about 1980 the stock market has been very strong. This has greatly increased the wealth of stockholders and when they have sold their stocks, their income has gone up. Back to what this means. Imagine a stair case with 5 steps (quintiles). Nothing magic about 5; you could also have 10 steps (deciles). It is just that quintiles are commonly discussed. Since about 1970, and especially since 1980, the "distance" from the top bottom to the top steps has increased. Is this GOOD or BAD? That is the question. An egalitarian ideologue would have the knee jerk response that this is BAD. Why? Because there is a greater gap between "the rich" (top 2 steps) and the "poor" (bottom 2 steps). And that is BAD. Everyone should be more equal. Don't ask why. But anyone who gives the matter much thought will realize that more information is needed to decide. There is a another independent parameter needed to describe the economy/society: namely MOBILITY. How fast do people move up (or down) the steps? THREE EXTREME CASES: A-Consider the case of low or zero moblilty. This means the same people are in the same quintile (on the same step) their entire life: born rich or poor and you stay that way. B-Rapid Mixing: Everyone has an equal probability of being in any of the quintiles (steps) every year. If you are in the top (or bottom, or where ever) THIS year, you still have an equal chance of being in any one of the quintiles NEXT year. C-A progression up the steps. Everyone starts on the bottom step (quintile), and advances up one step every 12 years. From 12 to 24, everyone is in the next to bottom quintile, from 24-36 they are in the middle step, advance to next to top at age 48, move to the top quintile at 60 and then die there when in their 70's. Well since they don't count people until they have an earned income, perhaps a better description would be everyone starts on the bottom step at age 15 and advances to the next every 10 years. At 25 they move to the 4th quintile, to the middle one at 35, to the second at 45 and to the top at 55. Then at age 65 some die and some move down a step or two when they retire. Clearly, (I claim), for case A, a greater gap between the steps is BAD. But for cases B and C, the greater the gap between the steps, the BETTER. Since most of the studies that I know of have been on income mobility rather than on mobility in total wealth, I will refer to INCOME MOBILITY. Perhaps other studies would indicate other results. But the income mobility studies are of how the incomes quintiles of individual people change with time. The results can be summarized in tables such as that of the Hubbard Study on my web page at: http://www.geocities.com/capitolhill/4834/101.htm Note the results are in terms of the fraction of a population that moves to another income quintile during the term of the study. While none the models above is a perfect fit, the closest to the US is case C. And the income mobility does not need to INCREASE as the steps get bigger. If it does not DECREASE, this means the people are moving "up" the steps as fast now (Steps per decade), as they did when the gap between steps was smaller. Or as people do in other countries where the gap is smaller. And all the studies indicate that as the steps have become bigger, the rate that people ascend them has remained about constant. And this is GOOD. -- ,,,,,,, _______________ooo___(_O O_)___ooo_______________ (_) jim blair (jeblair@facstaff.wisc.edu) For a good time call http://www.geocities.com/capitolhill/4834 AND: masonc@ix.netcom.com wrote:(of the Grinch post); ... One point is worth making. Here is the poverty rates by age for 1994. Note that Social Security is included as income. ( By the way, wealth and income are two different things. A retired person with no income is depending on savings, i.e. wealth, for survival ) Percent below poverty level, all races. U.S. Stat.Abs 1996 #733 under 18 21.8 18 to 24 18.0 25 to 34 13.2 35 to 44 10.9 45 to 54 7.8 55 to 59 10.4 60 to 64 11.4 65 and over 11.7 75 and over 13.9 Hi, I see something different in these figures: a confirmation of the Hubbard Study on income mobility. As people born "poor" get older and more experienced, most of them move into the higher income quintiles. The Hubbard study indicated about 14% of the population "stuck" at the bottom. This indicates only about 8% (7.8%), but not bad agreement as these things go. See the Hubbard Study at: http://www.geocities.com/capitolhill/4834/101.htm As you say, this "poverty" is based on income and not wealth. Lets find a similar chart of wealth vs age. Any guesses about what that will look like?? Next question, is that TAXABLE income? As in, don't count those tax free investments and city bonds that many retired people get their income from? So maybe we need a chart of SPENDING vs age? But realistically, the retired don't NEED the same income as the young. They aren't buying a house, raising kids, or saving for retirement. They don't pay Social Security on their income. And they get that senior citizen discount. --