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Steve Horwitz

US median incomes have been stagnant recently, but it doesn't mean what the people who say it think it means. A median can be stagnant or even fall *over time* even though every person at T1 is higher at T2. All you need is "new entrants" at T2 who come in below the median.

Most US households have seen their incomes improve over time while households new to the distribution each year come in below the old median. Hence the median doesn't rise, but everyone is still better off. And to the extent the new households are immigrants, they are very likely to be better off at the bottom of the US distribution than wherever they were at home.

Rafe Champion

If prices are falling, people are better off on the same income. I understand that in the late 19th century US there was something like 40% price deflation over some decades with stable wages but wage-earners had 40% more buying power.

What is the problem with deflation? (If you are not a faux Keynesian?)

Mario Rizzo

"If you don't think ideas matter, why did you come here"

What is this supposed to mean? Matter for what? I personally enjoy ideas and would have gone to this lecture (had it been in New York) for that reason alone. But the fact that you can get an audience for a lecture doesn't prove much regarding the main issues. George Stigler got an audience but he didn't think that abstract ideas of intellectuals had much influence on the development of political institutions. Intellectuals, otherwise powerless, love to feel that they influence big events in a significant way. The jury is still out in my opinion.

aje

Steve and Rafe - great points. If I were to challenge Danny on this I'd have made the two points you mention: (i) there's a heap of measurement issues that fail to capture technological advancement that lead to falling real prices and increases in quality (Don Boudreaux is good on this); (ii) a longitudinal study would show that the bottom decile in 1970 are not the same people in 2000 (Steve - your powerpoint on this is excellent)

Mario - even if intellectuals have little practical influence, the fact that the think they do implies they believe ideas matter. To a hardline Marxist (which were probably present) then I don't think attendance is a contradiction, but Rodrik was probably directing that at those of us who were there for more than just curiosity and intellectual self-development

Quinn

Just a couple of questions in relation to the above comments that may appear to seem like sniping and nit-picking, but aren't meant that way. I'm just seeking clarification.

Rafe; you say that "in the late 19th century US there was something like 40% price deflation over some decades with stable wages". But doesn't that mean that 'real' incomes rose over that period?

AJE; you mention that "the bottom decile in 1970 are not the same people in 2000" which is no doubt true, but surely that's not the whole story, and not the point being made? You would expect that group to consist of different people over time since, a) eventually they will all be dead, and, b) people in that group will move jobs, gain promotion, emigrate, and so on. Isn't the point being made that overall incomes for people in certain strata of society have not improved? That the poorest are still as poor as before, and that when they improve their lot and join the median income group they are no better off than those on median incomes a decade ago? In other words, a rising tide doesn't lift all boats after all, albeit some boats are able to move to plusher harbours, but under their own steam.

Dr Alister McFarquhar

A very stimulating summary

When economists find their models wont predict they turn to institutions or culture or worse ontology

Rodrik falls in category- UN does not work -we need a new UN

Alvaro

(off-topic) Hey Anthony here it is an interesting paper for future QM lessons regarding Benford's Law and the Iranian elections

http://images.derstandard.at/2009/06/19/0906.2789v1.pdf

Cheers,
Alvaro.

Lara Jane | Ultimate Lifestyle Project

Very interesting, but a lot to take in also. Have printed it and will read it later this evening when it's less noisy.

Thanks for taking the time to write.
Lara

Rosie

THX that's a great awnser!

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