Thursday, September 19, 2002

In the Daily Telegraph today, an alarming example of statistical ineptitude. This article makes the absurd claim (in a discussion of child poverty levels), that the median of the income distribution is 'measured by halving the difference between the incomes of the highest- and lowest-paid people in Britain'. Rubbish. The median of a distibution is that value such that half of the population of a distribution is below it, and half above. It is the point at which the cumulative frequency of the distribution = 0.5. It was somewhere around £22,500 p.a. in the UK in 2000/01 (I'm using the value for 60% of 'equivalised' median income for a two-parent, two child household found here), which is around $35,000 p.a.. The reason for using a median rather than a mean is that the median is rather less sensitive to outliers than the mean. The 60% figure derives from the fact that 60% of median in typical income distributions is close to 50% of mean income, which was the measure used previously.

Is it too much to ask that reporters on a quality broadsheet paper be at last vestigially numerate?

ASIDE: of course the whole notion of a 'poverty' level that tracks median income is highly contentious. If you double everyone's salary in real terms, then the poverty level remains unchanged. While it is fair to say that median income 100 years ago would not be considered adequate today, and therefore there needs to be some adjustment of thresholds, anti-poverty campaigners seem to be more concerned about distribution of income than absolute levels. It appears they would rather rich people were poorer, than poor people were richer (at least if their adherence to discredited policies of punitive taxation are anything to go by).

ASIDE 2: if we take the Telegraph's definition as true, then we get some interesting results. According to this report, Formula 1 supremo Bernie Ecclestone is the richest man in Britain. Let's assume he made several million pounds last year, and the 'lowest paid person' made nothing. Then half the difference between them is half of several million pounds, yielding the result that poverty level in the UK is over a million pounds.


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