Summaries of income
I don’t want to get into the general business of election fact-checking, but we have a Stat-of-the-Week nomination for a statement that is (a) about a specifically statistical issue at the high-school level, and (b) unambiguously wrong. From Richard Prebble’s “The Letter”:
Cunliffe is basing Labour’s election campaign around the claim that inequality is growing. Fact check: inequality is falling and New Zealand remains a very equal country. The claim that around a quarter of a million children are in poverty is dubious, to say the very least. Cunliffe says households in poverty have less than 60 percent of the medium income after housing costs. If Bill Gates came to live in New Zealand, the medium income of the country would rise and, according to that logic, more children would be in poverty.
David Cunliffe, as you presumably know, talked about the median, not “medium”; the use of a fraction of median income as a relative poverty threshold is very common internationally. The reason for using the median is precisely that the median income of the country would not rise if a few billionaires were added to the population. The median, the income of the household in the middle of the income distribution, is very insensitive to changes in or additions of a few values. That’s what it’s for.
While I’m writing, I might as well mention the inequality statistics. Mr Cunliffe isn’t making up his figures on children in poverty; they can be found in the 2014 Household Incomes Report from the Ministry of Social Development [update: that figure is 260000, which matches what The Letter reported was said, but the actual speech said 285000]. The report also gives trends in the Gini index of inequality and in the proportion of income spent on housing. StatsNZ gives trends in the ratio of 80th to 20th percentile of income, before and after housing costs. The details of trends in inequality depend on how you measure it, but by these measures it is neither falling, nor notably low internationally.
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