2012 in review

I know I said that my last post would be the final one of 2012, but I thought I would post the 2012 annual report for this blog.

Here’s an excerpt:

600 people reached the top of Mt. Everest in 2012. This blog got about 5,300 views in 2012. If every person who reached the top of Mt. Everest viewed this blog, it would have taken 9 years to get that many views.

Click here to see the complete report.

Happy New Year

This will be my last post of 2012. It’s been an interesting year. I’ve written more posts than I expected to, and my readership has climbed a little (although is still not particularly high). A couple of the posts that have been popular (at least in terms of readership) have been REF2014: Good or bad? and More REF madness. This has been a bit of a theme for me this year. I’m quite concerned about the impact REF is having on UK universities and am rather disillusioned at the moment. I’m hoping the new year will reduce my cynicism and that I can start enjoying my career again.

Nothing else has had a particularly high readership. I’ve written more about income inequality and a post I wrote in 2009 about the The Gini coefficient continues to attract readers. I’ve also commented on the possible effective privatisation of the NHS and am certainly very concerned about the direction in which the coalition government appears to be taking the country. It still amazes me that the financial crisis – that started in 2008 – seemed to be a strong indicator that neo-liberal policies have real problems and yet the government appears to be continuing with these kind of ideas. I’m certainly not proposing that we should implement full socialism, but hoping that the free market will save us seems incredibly short-sighted. Some may well benefit, but most will almost certainly not. We live in a social democracy and pretending that the private sector can solve all problems, and that welfare benefits are largely given to those who are “scroungers”, is incredibly naive and simplistic.

Anyway, that’s all I was going to say. I hope everyone has a good new year and that 2013 is better for most than I suspect 2012 has been.

Merry Christmas to one and all

It’s Christmas Eve. I’ve finished all the work I need to do before the start of next semester and am now relaxing with a beer while watching “The Grinch who stole Christmas” with the family. I just wanted to wish anyone who read this (and anyone else for that matter) a great Christmas and New Year. I’m not religious so really just see this as a time to relax with family, and recover from what has been a busy (and somewhat stressful) year. I thought I would post this video by Tim Minchin that pretty much sums up what I feel about Christmas. It’s very good, but a little long.

Robin Ince and Brian Cox

So, Robin Ince and Brian Cox wrote an article in the New Statesman about politicians not elevating mere opinion above science. I’ve read it and thought it was fine. Didn’t analyse it in great detail but the general idea that politicians should at least be aware of what science is telling us and should be using it to inform their decisions is perfectly sensible as far as I can tell. I don’t think it trumps everything else, but it should inform policy. I also think more scientists in parliament would be good, but I don’t think that this means more published researchers. I just take it to mean more people (doctors, engineers, chemists, physicists, ..) who have an understanding of science and of numbers .

Their article does, however, seem to have riled a few others. Jack Stilgoe in the Guardian suggest that “science and politics needs counselling not separation”. He refers to the views of Cox and Ince as being “bad politics” and criticises Paul Nurse (president of the Royal Society) for saying “keep science as far as is possible from political, ideological and religious influence”. I think, however, that Jack Stilgoe is somewhat missing the point (or at least my understanding of the point). I don’t believe that anyone is suggesting that there shouldn’t be a link between science and politics (if anything it’s the reverse), but the scientific method is well founded and so shouldn’t unduly be influenced by politics.

It’s true that different scientists may disagree about the best way to analyse a complicated data set or about the best way to set up a complicated computer simulation, but over time methods get tested and improved and the results of experiments and observations determine which theories are the closest representation to what is actually happening in the world around us (to reality, I guess). Politics can determine which areas of science are important and deserve funding, but it can’t (or shouldn’t) influence the results of science. The goal of science should not be to justify an ideology, it should be to understand what is actually happening in nature. It is very difficult for scientists to not have some kind of pet theory, but good scientists change their minds if experiments or observations show that their theory is wrong. I don’t think scientists should be playing politics in order to get politicians to consider the results of scientific enquiry.

A post by someone called Haralambos Dayantis is even more strongly critical of Cox and Ince and suggests that the geek movement is bad for science. I must admit that I don’t know much about the Geek movement, but I did find this article quite unpleasant. It suggested that Cox and Ince were amongst those who had a sense of superiority and that the Geek movement fosters a “thoroughly masturbatory environment” and referred to those involved as “circle-jerks”. I can, however, thank Haralambos Dayantis for giving me the opportunity to use the term masturbatory in a post though. A lot of the people he is referring to are clearly celebrities and, as such, I don’t really expect them to engage with me (although I can thank Brian Cox for getting me my highest number of readers on a single day). They will naturally come across – at times – as having a sense of superiority. Personally, I’ve been quite impressed by the various celebrities (mainly comedians) who engage with science and who do it fairly well.

The two main critics of Cox and Ince both seem to be science communicators/science policy experts. They both actually seemed to agree with quite a lot of what Cox and Ince had written and it seemed a little (to me at least) that they were really just being pedantic about the details, rather than actually constructively engaging with the message that Cox and Ince were trying to get across. What I think I agreed with the most was the response (by Martin Robbins) to the abovementioned post by Haralambos Dayantis. Firstly, he seems to suggest that the Geek movement isn’t particularly well-defined so aiming specific criticisms at it doesn’t really make sense. He then also criticises the tone of the article (as I have) and suggests that it comes across a bit like a formal science communicator being slightly bitter that some celebrities (some of whom – such as Brian Cox – are actually scientists) are better communicators than they are. If they really wanted to help, they should constructively engage and give reasoned advice (if they are indeed experts at science policy/communications) rather than being overly critical of those who happen to be good at communicating science to the public.

It is possible that I’ve misunderstood (or misrepresented) some of what has been written about this topic. I haven’t analysed all the articles in extensive detail. As usual, I’m happy to take corrections or comments through the comments box (that’s assuming anyone actually reads this).

Paper in Fire

I was trying to think of something to post and am a little tired of writing things that seem negative and critical. It’s also Christmas time, so it feels like I should post something a little different and maybe a little more upbeat. I remembered a particular music video that I watched as a teenager in the 1980s. It had a very good fiddle (or violin) solo. I think I was also somewhat attracted to the fiddle player. It was a John Cougar Mellencamp track, but I can’t seem to find it (or if I have, I’m not recognising it). I did find this one though, which I also remember enjoying and it does have a really good feel to it.

Income mobility

I wrote a post a while ago about the income distribution and probability. What I was suggesting was that the income distribution is really a probability distribution and that it gave an indication of the likelihood of someone earning a particular salary. What I ignored was that the income distribution is really just a snapshot in time. There will be income mobility and so those in a particular income band today may be in a different income band in the future.

I had, however, assumed that this wouldn’t be particularly significant. I am now in the top 10% of earners and, unless something were to go horribly wrong, I suspect I will remain in this band for the rest of my career. I will therefore spend more than half of my career in the top 10% of earners. It also seems (from what I can see) people reach their peak earnings sometime in their late 30s or early 40s. It therefore seems that most people will spend about half their careers in a particular income band and that would, therefore, suggest that there can’t be that much mobility. Basically, it seems that – for example – over the course of a typical career only about 20% of people could spend a significant amount of time in the top 10% of earners. I have, however, discovered that studying income mobility is extremely complicated.

What motivated this post was a video (below) by Steven Horowitz who is a professor of economics at the St. Lawrence University in Canton, New York.
The basic argument in the video is that, when inflation is taken into account, everyone is better off today than they were in the 1980s. Furthermore, income mobility means we shouldn’t be using income distributions when considering poverty because those at the bottom today may not be there in the future. An additional point was that if you consider the average incomes of the bottom 20% and top 20% in 1979, the bottom 20% have seen a much bigger rise than the top 20%.

I will acknowledge the following. It is technically possible for incomes to become more unequal and yet for the lowest earners to still not be in poverty. The issue of poverty being relative or absolute is clearly complicated. I would, however, argue that as inequality increases, the lowest earners become more and more disenfanchised (both economically and politically) and so societal problems will increase as inequality increases. I do, however, think that relative poverty must have some merit. Clearly many people survive in circumstances much worse than almost anyone in the UK or the US. This doesn’t, however, mean that it is acceptable for our society to evolve into one where the lowest earners live in these kind of conditions. How we define poverty must, to a certain, extent depend on the wealth of our societies.

I do, however, have real issues with what Steven Horowitz says about income mobility and about the rise of the lowest and highest incomes since the 1970s. Steven Horowitz says that if you divide people – at a given time – into 5 income intervals (bottom 20%, next 20%, …) and then look at how those in each interval are distributed 10 years later, more than 50% of those in each interval will have moved to a different income interval (i.e., there will be income mobility). This comes from a report that has the following table which compares incomes in 1996 and 2005 and what he says does indeed appear to be true.
What he fails to point out is that at least 70% of those in an income interval in 1996 are either in the same interval in 2005 or in an adjacent interval. Typically, also, a third – or more – remain in the original income interval. A reasonable fraction of those in the bottom 20% in 1996 are still there in 2005 and a majority are in the bottom 40%. Only 5.3% of those who were in the bottom 20% in 1996 made it to the top 20% by 2005.

This doesn’t appear particularly mobile to me and seems marginally consistent with my initial suspicions about income mobility. What’s more, if you look at the video (somewhere near the middle) he has some illustrations of income mobility. The graphics show a bunch of people in the bottom 20% and then shows them moving up (over time) through the income distribution. In the first he shows them ultimately roughly equally distributed in the 5 income intervals. In a later one he shows a larger fraction going from the bottom 20% to the top 20% than to any other income interval. This seems incredibly disingenuous given that a large majority of those in the bottom 20% will ether stay there or move up into the next interval. Only a few percent (over the course of 10 years) will get from the bottom to the top. Although income mobility clearly happens, this videos seems to suggest that it is much more significant than the data would suggest.

Later in the video Steven Horowitz claims that in 1975 the lowest 20% had average incomes of $1263 while the highest 20% had average incomes of $50077. By 1991 he claims that these had increased to $29008 and $54431. The lowest earners had therefore – he claims – seen a much larger increase in their average incomes than the highest earners. I found this very confusing as all the indicators of income inequality (Gini, 90/10 ratio) suggest the reverse. I struggled to find comparable data, but did find US household incomes for the appropriate period. According to this data, the bottom 20% of households had an income (in 2005 dollars) of $9636, while for the top 20% it was $96188. By 1991, this had increased to $10101 and $123179 respectively. Quite how the average income of the bottom 20% could be $29008 when (in 2005 dollars) the household income of the bottom 20% was only $10101. Furthermore, according to this data, the household income of the top 20% had increased (21.9%) by a much larger fraction than that of the bottom 20% (4.6%). This is completely different to what he says and much more consistent with all of the inequality measures that I’ve seen for the same time period. Either he’s made a mistake or he’s selected his data to suit the story he wants to tell.

I think Steven Horowitz has conveniently argued that poverty is not relative and that everyone is better off today than they were in the past. He has over-represented the significance of income mobility and then somehow managed to find some data suggesting that the incomes of the lowest earners has increased by a much larger fraction than the highest earners despite all other indicators suggesting the reverse. I think these kind of discussions are very important but they become incredibly difficult if Economics Professors either don’t understand the data or completely misrepresent it to suit their ideology.

Owen Jones and the “supposed” fantasy economics of the left

I encountered an article titled Owen Jones and the Left’s Fantasy economics. It seems that Owen Jones really gets under the skin of some on the right, which makes me think that at least some of what he says must have merit or they’d just ignore him. The article was based on a report from the Office of National Statistics that looked at the change in real wages since 1986.

The article is factually correct, in the sense that it correctly presents the results of the report. Most of what the article says is based on the figure below. Basically, the ONS report looked at hourly wages in 1986, adjusted them for inflation, and then compared them with hourly wages in 2011. The result is that, in 2011, every income band has seen a significant percentage increase in hourly wage. The conclusion is, therefore, that everyone is better off (compared to what they were in 1986) and the Left should stop complaining and should really start analysing and interpreting the data properly. There are, however, a number of issues with this interpretation.

Firstly, it’s clear that the top earners have seen a bigger percentage increase than the bottom (apart from the bottom few percent). This is consistent with numerous other indicators (Gini, 90/10 ratio) that show that the UK has become more unequal over the last few decades. What’s more, the figure somewhat under-represents the change as a big shift happened around – and just before – 1986 (see an earlier post). The interpretation in the article is that poverty is absolute not relative, so as long as everyone’s salary increases relative to inflation, everything’s fine. There may, in a sense, be some merit to this. One could imagine a society that was very unequal, but in which everyone could afford the basics and, to some extent (compared some other parts of the world) this is true of the UK, but it certainly appears to be getting harder for those on low incomes to cope. Also, the Poverty Site suggests that, today, the top 50% of earners take more than 75% of all the income. Imagine this continued to increase to the, admittedly, extreme case of the top 50% taking more than 90% of all the income. It’s hard to imagine that any industry would bother catering for the bottom 50% of earners. They would only be taking home 5% of all the income, so what’s the point. I can’t see how, in such an extreme situation, poverty would not be relative, despite what any indicators may imply.

The above is, in some sense, my opinion and I can’t really think of a good way to quantify the impact of increasing inequality (although Kate Pickett and Richard Wilkinson make some convincing arguments in their book “The Spirit Level”). There are, however, some fairly straightforward criticisms of the article. The report used the Consumer Price Index (CPI) when determining how to correct for inflation. CPI does not include housing costs. The Retail Price Index (RPI), however, does and is typically about 1% higher than CPI. I downloaded the data from the report and recalculated the changes based on RPI, rather than CPI, assuming the average RPI was 1% higher than the average CPI used to determine the figure shown above. The resulting figure is below, with the blue line showing the original data and the red line showing my new data. This shows that, including housing costs, the increase is less significant than initially indicated.
The other issue I have is that it only considered full-time employees. I’m yet to find a decent definition of full-time employment but there appears to be a large number of people in the UK who are underemployed. They are working fewer hours than they would like and presumably are not included in this report. I always feel that annual income is more of an indicator than hourly wage. The report is, therefore, presumably underestimating the increase in wages for those on low incomes (since it is ignoring all those who have been, and who currently are, underemployed).

There was one final thing about the article that somewhat irritated me. It referred to a report by the Resolution Foundation called Low Pay Britain. What the article referred to was that, according to the Resolution Foundation, only 3.8% of workers in the UK earn below the minimum wage. What it failed to mention was that a further 20% earn below what is regarded as a Living Wage. One could debate what the living wage actually should be, but it seems that many people in the UK are on salaries that make it difficult to live. Maybe in some absolute sense they can still survive, but it seems clear that inequality has increased in the last few decades and I would still like to hear a solid argument for why our society is benefiting from this increasing inequality.