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No[see edit], but they -- retired, disabled, students -- are significantly more likely to be in that income group, and all of those groups fit the pattern you'v

No[see edit], but they -- retired, disabled, students -- are significantly more likely to be in that income group, and all of those groups fit the pattern you've observed -- they spend more than they earn. And I asked about your qualifications because you didn't do some very basic things to the data before drawing your conclusions. [Edit: typically in studies like yours, YOU would quantify the number of retired, disabled, etc groups that may affect the results, and justify why you did or did not exclude those groups. I don't know what portion of the under 5k income group those people represent. You should know, and should have data on why this does not affect your results.)

yummyfajitas 13y ago
If you have data sources (or proper econometrics papers) that slice things more narrowly, I'd love to see them. If they are as basic as you suggest, possibly you have a link showing how to do it? If I'm so clearly wrong, I'd love to see a refutation. (Incidentally, ultimately the right thing to do would be to simply look at the law and compute income-taxes+transfers+in kind as a function of earned income. But I don't know how to do that.)
- rgbrenner 13y ago
  I'm not an economist.. I imagine there are papers with better data, but I would have to spend some time trying to find them. I did come by this article which deals with the same question: http://gregmankiw.blogspot.com/2006/09/measuring-poverty-income-vs-spending.html http://gregmankiw.blogspot.com/2006/09/measuring-poverty-inc... http://economistsview.typepad.com/economistsview/2007/06/family-income-v.html http://economistsview.typepad.com/economistsview/2007/06/fam... If income volatility has increased, it could explain why the spending-income gap is so wide, and why they (poor) spend more on education (retraining to re-enter the workforce). Maybe try asking EconTalk (podcast of economics topics).. Sounds like something he would find interesting, and he often takes questions and makes episodes out of them. http://www.econlib.org/library/contact.html http://www.econlib.org/library/contact.html
  - yummyfajitas 13y ago
    Those are interesting, but don't really address the same question. A quick google search also turns this up: http://johnhcochrane.blogspot.co.uk/2012/11/taxes-and-cliffs.html http://johnhcochrane.blogspot.co.uk/2012/11/taxes-and-cliffs... The numbers are more or less in agreement with mine, albeit more accurate (since they look at actual volume of taxes/transfers) and computing slightly different numbers (disposable income vs income rather than consumption vs income). They also show quite a few income cliffs. I hope you'll forgive me for not linking to a much better 2012 blog post from my less interesting 2011 blog post. ;)

yummyfajitas 13y ago

If you have data sources (or proper econometrics papers) that slice things more narrowly, I'd love to see them. If they are as basic as you suggest, possibly you have a link showing how to do it? If I'm so clearly wrong, I'd love to see a refutation. (Incidentally, ultimately the right thing to do would be to simply look at the law and compute income-taxes+transfers+in kind as a function of earned income. But I don't know how to do that.)

rgbrenner 13y ago
I'm not an economist.. I imagine there are papers with better data, but I would have to spend some time trying to find them. I did come by this article which deals with the same question: http://gregmankiw.blogspot.com/2006/09/measuring-poverty-income-vs-spending.html http://gregmankiw.blogspot.com/2006/09/measuring-poverty-inc... http://economistsview.typepad.com/economistsview/2007/06/family-income-v.html http://economistsview.typepad.com/economistsview/2007/06/fam... If income volatility has increased, it could explain why the spending-income gap is so wide, and why they (poor) spend more on education (retraining to re-enter the workforce). Maybe try asking EconTalk (podcast of economics topics).. Sounds like something he would find interesting, and he often takes questions and makes episodes out of them. http://www.econlib.org/library/contact.html http://www.econlib.org/library/contact.html
- yummyfajitas 13y ago
  Those are interesting, but don't really address the same question. A quick google search also turns this up: http://johnhcochrane.blogspot.co.uk/2012/11/taxes-and-cliffs.html http://johnhcochrane.blogspot.co.uk/2012/11/taxes-and-cliffs... The numbers are more or less in agreement with mine, albeit more accurate (since they look at actual volume of taxes/transfers) and computing slightly different numbers (disposable income vs income rather than consumption vs income). They also show quite a few income cliffs. I hope you'll forgive me for not linking to a much better 2012 blog post from my less interesting 2011 blog post. ;)