Alan Reynolds

 A widely circulated Associated Press story says, "The wealthiest 20 percent of households in 1973 accounted for 44 percent of total U.S. income, according to the U.S. Census Bureau. Their share jumped to 50 percent in 2002."

 Author Leigh Strope missed no time getting to the real point -- political missionary work. "President Bush touts a strong economy that is growing, but polls find ... John Kerry is trusted more on the economy, with Democrats talking regularly of ?two Americas' divided between the rich and everyone else. The argument has merit, some private economists say."

 In what sense could this allegedly "growing gap between the haves and the have-nots" be called "news"? The cited Census report is a year old. And it deals with 2002 -- which was not a time when President Bush was touting "a strong economy."

 By using the word "jumped," the AP story clearly implies the income share of the top 20 percent "jumped to 50 percent in 2002." In fact, the share fell to 49.7 percent in 2002 from 50.1 percent in 2001. To describe a falling number as a "jump" seems remarkably shameless, even in an election year.

 Cautious readers might notice that, regardless of the nonexistent jump, the AP story claims to be talking about what happened "over two decades," which is creatively defined as starting with 1973. And although the story claims the share at the top "has steadily increased," it actually rose from 46.9 percent in 1992 to 49.8 percent in 2000 (when Clinton was president), but has not risen at all since then.

 To reach all the way back to 1973 in search of something to blame on President Bush raises a statistical problem I discussed in "Musky Income Myths" this February.  "It makes no sense," I wrote, "to compare long-term growth of average income in any top income group with growth below. Only the top group has no income ceiling, and the lower threshold defining membership in that top group rises whenever incomes in general are rising."

 In 2001, you needed an income above $83,500 to qualify for what the AP story mislabels "the wealthiest 20 percent" (income is not wealth). In 1973, you only needed an income above $62,069 (in 2001 dollars). Neither figure seems unduly rich, but the larger point is that this way of defining "the rich" changes over time. When the Census Bureau averaged all the income above $83,500 in 2001, nobody should have been surprised that they came up with a larger figure than in 1973, when they were including incomes $20,000 lower. The reason this bar keeps moving higher has a name. It's called progress.

Alan Reynolds

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