Wednesday, 12 April 2017

Porkies, Damn Porkies, And Statistics

The Guardian will dolefully report that the bottom 20% of households receives less than 5% of UK income, but that those in top 5% receive a whopping 40% - and they are pretty competent at making it sound like we live in a nation of gross injustices.

The problem is, as is often the case with these statistics, they speak only as though people are statically rooted to the present, and only analsyable by their financial income. Such a narrow consideration of people is bound to distort the truth. The reality shows a quite different picture.

For example, many people who show up in those stats as being in the poorer quintiles are pensioners who are retired from work and living quite comfortably in a property they paid off years ago, and with numerous state benefits on top. Another group often classed as poor will be students, whose investment in their future careers makes them appear on the radar as uncomfortably off, but who are, in fact, going to be some of the UK's higher earners.

Trying to capture people's financial situation with an off-the-peg statistical analysis doesn't take into account the temporality of their situation. Perhaps they have just started a business that will go on to do well, or perhaps they are part-time workers whose partners earn well above the median income. Perhaps they are having a bad year and next year will be better. Equally, perhaps some of the higher earners are having a good year, and next year will be worse.

Suppose you go into a poor neighbourhood and talk to someone called Tom. Tom tells you he did better last year than this. You might conclude that Tom is getting poorer. Suppose you then talk to Gerry in that same neighbourhood, and he tells you that he did better this year than last. A random sample across the UK of lots of Toms would give you a perceived narrative that the poor are getting poorer. A random sample across the UK of lots of Gerrys would give you a perceived narrative that things are looking up for the poor.

All that I've said here should hopefully be enough to get you to think carefully in the future when you see these 'grossly unjust' statistics being bandied about - they very rarely tell the whole story. And if you're still wrestling with the notion that assertions about inequality are quite often misleading, I have tons of blog posts on the subject.