Income status (was Re: Giffen Data?)

[From Rick Marken (2002.12.18.1420)]

Bill Williams (UMKC 18 December 2002 2:40 PM CST) --

[ Rick Marken 2002.12.18.0900] wrote about most people reporting that their
income was in a top bracket,

> I don't think it's a delusion, really. It's just ignorance.

It can't be "just ignorance." Something is going on which results in
people misreporting their standing in the income distribution. It's like
the kids on the Prarie HOme Companion who are "all above average." But, it
is something that wouldn't be all that difficult to replicate. Or, who
knows maybe I was delusional when I only thought I heard it on NPR.

I'm sure it's easily replicable. I just don't think it's "delusional" because I
don't think most people know where the cut off is for the op 5% (I looked in the
statistical index for 2000 and the 9% cut off was $100,000 household, but the
index doesn't give the cut off for the top 5% so even I, armed with the data,
don't know the cut off for the top 5%, though I do know that I'm not in it;-)). I
also think the answers to the survey may be more accurate than one might imagine
at first. What we need to know is the relationship between the household income
of the respondents and their judgment regarding whether or not their income is in
the top 5%. Only 1/2 the respondents said they were in the top 5%. If the sample
was fairly unrepresentative of the distribution of household incomes, the
respondents may be more accurate than they may seem to be at first glance. That
is, you might find that most of the 50% of respondents who said they had incomes
in the top 5% are actually in the top 10% or so. The median household income (in
2000) was around $37,000. If the survey picked up mostly people from the 50% above
the median (which is likely, since most of the people in lower 50% are probably
living in circumstances that make them inaccessible to the surveyors) then it's
possible that the one's who said they were in the top 5% were, indeed, pretty
close to being in the top 5%.

Best regards



Richard S. Marken, Ph.D.
The RAND Corporation
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