From Paul Krugman’s blog:
Matthew Yglesias notes that Tom DeLay is under the strange misapprehension that Texas is rich thanks to its low taxes and lack of regulation.Just one minor issue: you really shouldn’t use median income, which can be distorted to the extent that inequality differs across states. You should instead use income per capita. As it happens, the comparison is even more striking. Texas, with its glorious free market regime and deeply incentive-creating 25 percent rate of health uninsurance, has a per capita income of $37,187; nanny-state New Jersey, with its oppressive taxes and regulation of everything (what it takes to get permission to cut down a dying tree … ), has a per capita income of $49,194.
I'm not sure I follow this argument. Per capita income is just the mean, the total income divided by population, whereas median income represents the midpoint of the population. In other words, a very high income inequality will result in a much higher per capita than median income, because the mean rises when even a small minority of people make most of the income.
Both measures are important, actually, and it would be good to have the mode as well. By comparing different averages we can have a better sense of what the true situation looks like.
Posted by: Mahakal on April 20, 2009 12:22 PMI agree with you, Mahakal, and so did a lot of commenters on Krugman's blog.
Then again, I'd rather live in New Jersey than in Texas, regardless of any statistics.
Posted by: Joyful Alternative on April 21, 2009 7:05 PMI'd rather live in Berkeley than anywhere in New Jersey or Texas, personally. :)
Posted by: Mahakal on April 22, 2009 6:09 PM