Thursday, March 7, 2013

Statistics, Lies and Truths


There has been a viral video that I keep seeing on my Facebook page. it is this one to the right. The video summarizes several different studies.  They include an understanding of ideal income distribution, an expected reality of income distribution, and the determined reality of income distribution. They state these statistics in ways that they hope the average viewer would understand.  The problems that they state in the video may have serious consequences.  unfortunately the statistics they state in the  video are also unhelpful in proving their conclusion.  First, the video never goes into the details of how the distribution they cite were create beyond a general procedure.  Neither do the sources cited in the video.  Distributions themselves have no labels for the axis though given the proportional nature of the diagrams, the vertical axis would be proportion of money supply controlled by the percentile and the horizontal axis is percentile of income.  The stated distributions do tell us some information but it doesn't necessarily point to the conclusions reached.  For one the creator of the video made no effort to explain why the current distribution was bad. He simply compared it to the other distributions for the sake of shock value.  Two, the other distributions were stated to be a survey of opinions, not a distribution that analyzes what would create the least suffering, the highest motivation to work, the highest social mobility or the lowest inequality or a compromise between those ideas. Such a distribution would be difficult to find but certainly possible using economic principles.  It might not be what the population thinks it is.  Third, the causes of the inequality are never stated only that the statistics say that the tactics argued against by the wealthy are not sustained by the levels of income they have. Fourth, the information cited in the video is not in the references the actual study described in the video is not one of the links.
The positions described in the video may be accurate but the statistics the video uses do not mean what the authors say the numbers do.  It might be a good idea to take this video with a grain of salt.

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