economic about Data Analysis (excel and powerpoint)

Wealth

Income & Poverty

Wealth, Income, & Poverty  Wealth Data

 Sources

 FED: Survey of Consumer Finances

 IRS: Estate Tax Data

 Forbes: List of Wealthiest Individuals

 Typically calculated as “Net Worth”

 Tax data is narrower than survey data and uses individual rather than

household collection.

 Definition of “Wealth”

 May include stocks, bonds, home equity, pensions, defined contribution plans, social

security, etc..

 Broader the definition, the less inequitable the wealth distribution.

 Definition may depend on type of research being conducted.

 For evaluations of the general population, a broader measure (total wealth) is appropriate.

 For evaluations of business influence, a narrower measure (e.g. stocks and bonds) is

appropriate.

 “Financial Wealth” is more skewed than “Total Wealth”

 2016 Total Wealth: mean was $792,000 vs. median $189,000

 2016 Financial Wealth: mean was $340,000 vs. median $24,000

 Why? Total wealth includes the value of home equity.

Wealth, Income, & Poverty

 Income Data  Current Population Survey indicates that in 2016 the top 5% of households

made over $225,251 and the top 20% over $121,018.

 Gallup Poll

 A 2011 survey suggested that half of Americans believe $150,000 annual income or

1 million in net worth would make them “Rich”.

 Higher income segments that live in affluent areas may not feel “Rich”.

 Income Mobility  Relative vs. Absolute measures

 U.S exhibits low relative mobility, why?

 Heterogeneous demographics limiting upward mobility of the poor. (e.g. raising children in single-parent households).

 Wider income distribution requiring a greater absolute dollar raise to elevate one

to a higher percentile.

Wealth, Income, & Poverty  Income Growth

 Data collected by the Census

 BEA--FRED: Real GDP Growth Per Capita  Per Capita income indicates improvement over time.

 BLS--FRED: Full-Time Median Real Earnings  Real earnings, in contrast, have barely changed.

 Income indicators typically omit fringe benefits.

 Census--FRED: Real Median Household Income

 Census--FRED: Real Median Family Income  Excludes non-family households, distorting “typical” incomes of households.

 Does not account for decline in average family size (3.0 in 1973 to 2.5 in 2010)

suggesting family members may be better off with fewer members for a particular

income.

Wealth, Income, & Poverty  Poverty

 Census--Current Population Survey

 Census—FRED: Poverty Count

 Census—FRED: Poverty Rate

 Poverty Line: developed in the1960s as an absolute standard (adjusted only for inflation).

 Based on this metric, poverty fell in the 1960s and has generally leveled off since.

 Poverty line understates poverty?  In 1965 it was half the median disposable income, by 2009 it was one-quarter.

 If a one-half standard was maintained, the poverty rate would have increased since 1965.

 Poverty line overstates poverty?  Excludes non-cash government programs (e.g. food stamps, school meals, housing subsidies,

and medical care).

 When adjusted, poverty rate drops by one-third.

 Ignores wealth (particularly problematic when analyzing senior citizen poverty).

 Alternative measure: Supplemental Poverty Measure (post 2011)  Includes in-kind benefits and deducts taxes, child support paid, alimony, and work expenses.