Getting Inequality Wrong

June 12, 2017
Posted by Jay Livingston

Imagine that you earn $125,00 a year; your spouse earns $75,000. Not so hard to imagine. I probably know a lot of couples in this range. A $200,000 income puts you in the top fifth of US households.

Who do you feel closer to socially and economically: the family whose income is $60,000 or the family bringing home $1.4 million? The $60,000 is  the average household incomes for those in the middle of the distribution. The $1.4 million is the average of the 1%.

If you thought you were closer to the average American, you’re kidding yourself. So says Richard Reeves in a New York Times article that, to judge from my Twitter and Facebook feeds, has been getting a lot of attention. Your perception, says Reeves, isn’t just misguided, it’s “dangerously self-serving.”

The rhetoric of “We are the 99 percent” has in fact been dangerously self-serving, allowing people with healthy six-figure incomes to convince themselves that they are somehow in the same economic boat as ordinary Americans, and that it is just the so-called super rich who are to blame for inequality.

From the end of World War II until about 1980 income inequality in the US had been narrowing. Since then, overall inequality has been increasing. In support of this idea that it’s the top fifth and not just the 1% whose incomes are responsible, Reeves looks at income changes since 1979.

the upper middle class is solidifying. This favored fifth at the top of the income distribution, with an average annual household income of $200,000, has been separating from the 80 percent below. Collectively, this top fifth has seen a $4 trillion-plus increase in pretax income since 1979, compared to just over $3 trillion for everyone else. Some of those gains went to the top 1 percent. But most went to the 19 percent just beneath them.

It’s not surprising that the 1% got less than half the increase, but they got a lot more than 1%. Their incomes grew far more rapidly than did incomes of the rest of the top fifth.

(Click on a graph for a larger view.)

The above graph comes from a Brookings publication co-written by the same Richard Reeves. The graph certainly makes it look as though the real separation is between the 1% and the rest of US households. Yes, the top fifth is getting richer – more so than the middle-income households. But the differences can still be shown on the same graph. By contrast, the line for the top 1% is so far away from the others that in order to show the increase of the 81st to 99th, Reeves has to remove the 1% from the graph.

Now we can see that yes, the incomes of the rest of the top fifth increased  - from about $120,000 to nearly $190,000. But the average income for the 1% went from about half a million to over $1,400,000. Here’s a graph of those percentage increases – 192% (i.e., nearly triple) for the 1%, 70% (less than double) for the rest of the top fifth.

It’s misleading to talk about “the upper fifth” as though those at the 85th percentile had a lot in common with the 1%; even within the 1%, the differences are striking. In a 2013 blog post (here), Dan Hirschman converted Piketty-Saez data to show increases for different sectors of the top 10%, Most of us would consider all of these folks to be rich, but some got more richer than others.

 

Here is a clearer breakdown of incomes in the top fifth in 2016.

(HT: Philp Cohen)

What’s happened since the 1980s, is that the top 0.01% have pulled away. They have become the super-rich. In 1970, if you were in the 1% pulling down $1 million a year, Mr. and Ms. .01% might have lived in a somewhat larger house down the street. Now, they’re so far away you need Google Earth to find their estate.

Reeves seems to be deliberately fudging over the real gaps in income (and wealth, which he mentions not at all). That’s too bad because his point about the upper-middle class is not about inequality – their economic distance from the middle. It’s about mobility. In their effort to ensure a better, or at least equal, economic future for their children, they are making class boundaries more rigid. In effect, they are building a wall – sometimes, as with gated communities, a literal wall – to keep their families in and others out. Fewer and fewer of those coming from less affluent families will be able to get in. 

Making the Facts Not Matter

June 10, 2017
Posted by Jay Livingston

People get a clearer picture if you tell them what someone or something is rather than telling them what it isn’t. I’ve said that a few times in this blog (here, for example) in connection with writing. But it’s something that Donald Trump seems to know instinctively.  Here are two True/False items.

True or False: Donald Trump is president of the United States. True or False: Donald Trump is not president of the United States.

Regardless of what you wanted the answer to be, the second statement took you a fraction of a second longer to get. Positive statements are clearer and more quickly understood .

The same principle applies in political combat as well. When the news or opponents point out that Trump is lying or that he’s done something worse, Trump doesn’t spend much time denying. He prefers to go on the attack, making counter accusations. Or he makes positive claims about himself. It doesn’t matter that these accusations and claims are without a basis in reality.*

The front pages of New York’s tabloids the day after James Comey appeared before a Senate committee illustrate the strategy of Trump and his supporters both in the Senate and at the New York Post.

(Click on the image for a larger view.)

The Daily News, anti-Trump, lists the Trump lies suggested by Comey’s testimony. (For some reason, the News omitted Trump’s statements about Comey and the FBI, statements that Comey said were “lies plain and simple.”)

The Post, supporting Trump, puts “liar” in quotes, highlights Republican criticisms of Comey, Loretta Lynch, the Clintons, and the New York Times, and quotes the Trump camp’s curiously sunny view of the testimony.

Trump did not respond to the Daily News headline. He did not say, “I am not a liar.”** As we’ve learned from Nixon’s “I am not a crook,” that kind of denial turns the spotlight on precisely the question the speaker wants the public to ignore. That denial would link “Trump” with “liar” just as surely as Nixon’s denial linked his own name with “crook.”
                                                                           
If you can get people to make that association – person and trait – even though they may not be fully convinced that it’s true, you’ve gained a lot of ground. Trump senses this. It’s the basis of his name-calling strategy: Crooked Hillary, Lyin’ Ted, Little Marco, repeated endlessly. We can already see where Trump is going in the Comey matter. If he hasn’t been tweeting it out yet, it’s probably because he can’t decide between “Leakin’ Comey” or “Leaker Comey.” If Trump can get people to think that Comey is a bad guy – a leaker – they will more easily ignore whatever factual information Comey provides.

The larger point is that, at least in the short run and maybe longer, the facts are less important than overall image. Once we have a mental image of someone or something, we will filter the facts in a way that keeps that picture intact. If Trump can convince his followers (and perhaps others) that the mainstream media is “fake news,” they can more easily discount or ignore any facts reported by CNN, NBC, USA Today.

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* Last week, Trump said “Our tax bill is moving along in Congress, and I believe it’s doing very well.” In fact, there was no tax bill. His administration had not sent a bill to Congress. He also issued a tweet blaming Democrats for the large number of unfilled positions in his administration. But as Politico pointed out, “The Trump administration has formally nominated just 63 candidates – 39 of which have been approved – for 559 key positions that require Senate confirmation.”

** The next day, Trump did deny that he had said some of the things that Comey reported, but more important he said that he would testify under oath. (Don’t hold your breath. Trump has also said that he’d release his taxes, remember?  Anyway, the Congressional committees where Trump would testify are controlled by Republicans. Would they call Trump in to testify under oath when Democrats as well can ask questions?)

Boom Goes London, and Boom Par-ee

June 3, 2017
Posted by Jay Livingston

Ben and Jerry’s response to Trump and the Paris Accords is dripping with irony (irony in the literary sense that they mean the opposite of what they are actually saying).

Here’s reason #3.

The irony (the other kind of irony) is that many Americans agree. Here’s how I put it back in 2009 after I’d seen Randy Newman at Carnegie Hall (the full post is here):

“Political Science,” written at least 35 years ago, still sounds like the voice of American foreign policy based on American exceptionalism – a belief in our inherent goodness and innocence, a disregard for the decent opinions of other countries, and a readiness to use violence on those who disagree.

    No one likes us. I don't know why
    We may not be perfect, but heaven knows we try
    But all around, even our old friends put us down
    Let's drop the big one and see what happens

    We give them money-but are they grateful?
    No, they're spiteful and they're hateful
    They don't respect us-so let's surprise them
    We'll drop the big one and pulverize them.

It’s a more closely reasoned version of John McCain’s “Bomb, bomb Iran.”

Here’s the full version from a 2011 London concert.

You can hear the original recording by a much younger sounding Newman on “Sail Away” (1972), his third album (here).

Here we have the US, well-intentioned but misunderstood, and if all those other countries refuse to understand and refuse to do what we want, well, whatever happens, they’ve got it coming.  (“They all hate us anyhow, so let’s drop the big one now.”) It’s possible that this view of the relation between the US and the rest of the world has lost some of its strength since Newman wrote this song. (Most Americans were born after this song was written.) The song seemed out of date in the Obama years. Still, the persona Newman adopted for this song nearly a half century ago sounds much like our current Commander-in-Chief, the person we selected to be in charge of US foreign policy.*

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* Before the 2012 presidential election, Newman released “I’m Dreaming.” It was four years premature. Here’s the last stanza. (Listen to Newman sing it here.)

I’m dreaming of a white President ‘Cause things have never been this bad So he won’t run the hundred in ten seconds flat So he won’t have a pretty jump shot Or be an Olympic acrobat So he won’t know much about global warming Is that really where you’re at? He won’t be the brightest, perhaps But he’ll be the whitest And I’ll vote for that

Elections Have Consequences . . . for Norms Too

June 1, 2017
Posted by Jay Livingston

Did Donald Trump’s campaign and election cry havoc and unleash the dogs of racism?

Last June, hauling out Sykes and Matza’s concept of “neutralization,” I argued (here) that Trump’s constant denigration of “political correctness” allowed his supporters to neutralize norms against racism. If PC means that the people who condemn racism are wrong or bad, then what they are condemning must be OK. The logic might not be impeccable, but it works. I wasn’t sure that Trump had caused an increase in racist attitudes, but he gave people a license to express those attitudes.

Aziz Ansari made a similar point on Saturday Night Live  the day after the inauguration. (Apologies if you have to wait through an ad.)

Ansari’s version is much better than mine, and it reached a slightly larger audience. But there’s another important difference. I was talking about the message Trumpistas took from Trump himself before the election. Ansari is talking about the message they got from the electorate. The election changed their perceptions of the norms about expressing anti-immigrant views.

It’s as though the minds of half the country had been clouded by “pluralistic ignorance.” That’s the scenario where each person thinks X but assumes that everyone else thinks Y, so everyone keeps their true ideas to themselves. Then something happens that reveals those previously hidden preferences, and suddenly everyone feels liberated. From the Trumpista perspective, Trump was Dorothy throwing a bucket of water to dissolve the Wicked Witch of Political Correctness, and now all the Munchkins were free to express their feelings about Mexicans and Muslims (and perhaps others).

The 20% increase in hate crimes after the election certainly suggests that racists felt liberated by the election. Unfortunately, because of the uncontrolled variables and the small sample size,* this bit of evidence is hardly conclusive.

But we now have some experimental evidence on the topic. In the two weeks before the election, three economists** surveyed Mechanical Turkers in eight very Red states. The MTurkers were asked, in addition to other on-topic questions, if they would authorize the economists to make a donation on their behalf to a strongly anti-immigrant group, FAIR.  MTurkers were told, “The founder of FAIR is John Tanton, author of `The Immigration Invasion' who wrote ‘I’ve come to the point of view that for European-American society and culture to persist requires a European-American majority, and a clear one at that.’”

For half the MTurkers, the donation question included this:

Note: just like any other answer to this survey, also your donation decision will be completely anonymous. No one, not even the researchers, will be able to match your decision to your name. [emphasis in original]

The other half were told:

Important: in order to ensure the quality of the data collected, a member of the research team might personally contact you to verify your answers to the next question and the following ones. [emphasis in original]

In addition, some of the people were told that Trump was certain to win their state. Others were given no information.

The results strongly support the idea that norms – or at least people’s perceptions of the norms – make a big difference. People who thought their choice would be public were much less likely to make the anti-immigrant donation – 34% vs. 54%. But that difference held true only for people who were not told how popular Trump was in their state. Among the people who were told basically, “Trump is a sure thing to win your state,” knowing that their donation would be public (i.e., known to the surveyors) made no difference in their willingness to donate.

If the researchers had stopped there, they would have been able to say

• there seems to be a norm against giving money to anti-immigrant groups
• the knowledge of that norm makes people less willing to make a donation to blatantly racist anti-immigrant group if even one stranger can know about that donation
• if people think that many others in their state support an anti-immigrant candidate, they no longer feel that they need to keep their anti-immigrant views to themselves 

The results of the election gave the researchers a natural experiment to find out if the norms – or at least perceptions of the norms – had changed. Had Trump’s victory caused the scales of pluralistic ignorance to fall from the eyes of these Red-state Turkers?

The answer was yes. The election had the same effect as did the information about Trump support in the person’s state. It obliterated the difference between the public and private conditions.

To people who were reluctant to let their agreement with FAIR be known, Trump’s victory said, “It’s OK. You can come out of the closet. You’re among friends, and there are more of us than you thought.”

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* The sample size is essentially one. As Duncan Watts says in Everything Is Obvious. . . Once You Know the Answer, the difficulty in assessing cause and effect in a historical event is that history is run only once.

** Leonardo Bursztyn, Georgy Egorov, Stefano Fiorin, “From Extreme to Mainstream: How Social Norms Unravel,” NBER, May 2017 (here)