Is the economic disparity in the US that great?

[Al B. Sure!]

I got the AP Gov't test soon so the teacher gave out an old, released test and one of the questions had a graph concerning income distribution among families.

the most recent year was 1988 (the height of Reaganomics, remember). In that year...

Lowest fifth had 4.6% of the income
Second fifth had 10.7%
Third fifth had 16.7%
Fourth fifth had 24.0%
Highest fifth had 44.0%

40% of Americans control 68% of the wealth... though still quite a bit, this is a far-cry from liberal bull**** like the top 1% control half the wealth or what not... but is this that great of a disparity? i mean the top fifth got 10 times the wealth of the bottom fifth

[GePap]

1988 numbers are way out of date. I will look for newer ones.

[uh Clem]

Income or wealth?

[Al B. Sure!]

income

[Garth Vader]

There is a difference between income and wealth.

A quick search found this for income, which is close to your stats.

http://civet.berkeley.edu/sohrab/politics/income_67_00.txt

But wealth is much different

Top 0.5% 25.6%
Next 0.5% 8.4%
Next 4% 23.4%
Next 5% 11.4%
Next 10% 12.8%
Last 80% 18.5%

Source from same site

http://civet.berkeley.edu/sohrab/politics/wealthdist.html

[Dinner]

The difference between the richest and poorest really doesn't matter so much as what the standard of living is for the 95% of the population that isn't exceptionally rich nor exceptionally poor.

[GePap]

here is some nice data:

Quintile 1947-1979 growth 1979-1999 growth
Lowest fifth 120% -1%
Second fifth 101% 6%
Middle fifth 107% 11%
Forth fifth 114% 19%
Top fifth 94% 42%

From 1947 to 1979, the botton grew the fastest, lowering income inequalioty, but sicne 1979 i has gone up.

Income mobility: distributions of income are a snapshot at a given time whereas people's incomes change over time. Mobility is defined by how much one is able to move up and down the income ladder. Income inequality is less of a problem if the income structure is highly mobile. The way to measure mobility is through a Markov (transition) matrix: how likely is a person who starts with a given income to stay in the same range or move to another range as a function of time?
Below is a table showing mobility for the 1969-1994 period: e.g. a person in the second fifth in 1969 had 24.7% change of staying there by 1994 and 16.1% of moving up to the fourth fifth.

Income mobility 1969-1994 (persons in families)

1994 income group
1969 income First Second Middle Fourth Top
group fifth fifth fifth fifth fifth
----------------------------------------------------------
First fifth 41.0% 24.9% 16.2% 12.1% 5.8%
Second 22.4% 24.7% 23.9% 16.1% 13.0%
Third 16.9% 21.0% 23.5% 22.8% 15.9%
Fourth 11.3% 18.5% 19.7% 24.2% 26.3%
Top 9.5% 10.6% 16.6% 24.5% 38.8%

Having understood mobility, an important question is if mobility has improved, stayed the same, or worsened as the income distribution itself has become more unequal. This can be seen by comparing the mobilities of two different time periods, as shown below for the 1970s and 1980s (1990 data is not available yet but should show the same trend given the same basic growing inequality).


1979 income group
1969 income First Second Middle Fourth Top
group fifth fifth fifth fifth fifth
----------------------------------------------------------
First fifth 61.5% 24.0% 8.7% 4.4% 1.5%
Second 22.7 31.3 27.5 12.9 5.6
Third 9.6 22.5 29.6 26.1 12.2
Fourth 3.3 17.3 22.4 31.6 25.4
Top 2.9 5.0 11.9 25.1 55.2

1989 income group
1979 income First Second Middle Fourth Top
group fifth fifth fifth fifth fifth
----------------------------------------------------------
First fifth 61.0% 23.8% 9.5% 4.6% 1.1%
Second 22.9 33.2 27.7 13.5 2.7
Third 8.3 25.2 29.5 25.7 11.4
Fourth 4.6 13.0 23.0 33.2 26.2
Top 2.7 4.9 10.8 22.8 58.8

As you can see, income mobility did not increase but rather stayed the same or worsened. Another way to see this is that the percentage of people staying in the same fifth (in a year) has been rising steadily (e.g., since 1968 from around 62% to 66% in 1991).

all from http://tiger.berkeley.edu/sohrab/pol...ncomedist.html


a nice little chart, showing that the post-war drop in inequality is disappearing:



and a nice PDF file:

http://faculty.tcu.edu/jlovett/econ_data/Income%20Dist.pdf

which also shows how the US compares to other coutnries in this respect.

[monkspider]

Good post Ge. Having grown up in a bottom 5% household, I can assure you, it's not that fun.

[Al B. Sure!]

this is weird... while the income disparity is, in all honesty, pretty reasonable and what would be expected, the change in income disparity is ridiculously in favour of the rich and the wealth disparity is unbelievable huge... any reason why the income disparity would be so relatively small compared to income growth and wealth?

Monkspider:

also growing up under similiar circumstances, it wasn't that bad for me largely because i didnt know better existed... you don't complain about the summertime heat when you never saw an air conditioner before, know what i mean?

although if my father hadnt been a dead beat, i'd have been living in a lot better circumstances... once again, immorality is the cause of economic problems

[PLATO]

GePap. Fantastic information. Do you know what, if any, correllation there is to the tech boom and the efficiencies that it created?

[David Floyd]

My only question about income and wealth disparity is this: Why is it anyone's business how wealthy anyone else is, or how much money they make? Isn't that a private matter? Sure, Bill Gates may have a hundred million times more wealth than any of us, but is that actually hurting you? No, of course it isn't. Bill Gates deserves his money, on the sole basis that he earned it legitimately.

[St Leo]

once again, immorality is the cause of economic problems

LOL. Keep telling yourself that.

[Shi Huangdi]

Albert Speer here is most likely lying. He has had a computer with internet acsess since at least he was 13, but didn't have an air conditioner!? Plus, he used to complain about how people from the poorer neighberhoods would come up to his decent middle class neighberhood. I think this and the "all houses aren't made of brick!?" type posts are just trolling for sympathy.

[Al B. Sure!]

David Floyd:

why do you assume anyone in this thread is in favour of socialism?

I personally think the income disparity will close if businesses succeed... the income disparity was shrinking, as GePap pointed out, after the second world war, when American industry was booming. Since the 70's, however, thanks to anti-business policies in the States, many businesses moved over-seas... as a result, the economic disparity is widening...

so we need to help DOMESTIC businesses improve and succeed in order to close the gap

[David Floyd]

I'm not saying that anyone is a socialist, I'm simply asking why anyone should care how rich anyone else is - seems like a personal privacy thing to me.