Why is this what matters? It’s a bizarre metric. Why should we care what the median change was, instead of some form of mean change, or change in the mean or median wage?
The critique that the justification wasn’t great because the mean wage dropped a lot in the example is fair. Yet, in the proposed alternative example it remains quite likely that people will perceive the economy as having gotten worse, even if the economy is objectively so much better − 2⁄3 will say they’re personally worse off, insufficiently adjust for the impersonal ways of assessing the economy, and ultimately say the economy is worse.
Neither Δ(MedianIncome) nor Median(ΔIncome) is a bizarre metric.Δ(MedianIncome) may be great for observers to understand general trajectories of income when you lack panel data, but since people use their own lives to assess whether they are better off and in turn overweight that when they judge the economy, Median(ΔIncome) is actually more useful for understanding the translation from people’s lives into their perceptions.
Consider a different example (also in real terms): T1: A makes $3, B makes $3, C makes $3 ,D makes $10, E makes $12 T2: A makes $2, B makes $2, C makes $3, D makes $9, E makes $16 The means show nice but not as crazy economic growth ($6.20 to $6.40), and the Δ(MedianIncome) is $0 ($3 to $3) - “we’re not poorer!” However, the Median(ΔIncome) is -$1. And people at T2 will generally feel worse off (3/5 will say they can’t buy as much as they could before, so “this economy is tough”). Contrast that with (still in real terms): T1: A makes $2, B makes $2, C makes $4 ,D makes $10, E makes $12 T2: A makes $3, B makes $3, C makes $3, D makes $10, E makes $12 The means show nice but not as crazy economic growth ($6 to $6.20), and the Δ(MedianIncome) is -$1 ($4 to $3) - “we’re poorer!” However, the Median(ΔIncome) is $0. And people at T2 will generally feel like things are going okay (only 1 person will feel worse off).
And these are comparing to 0. Mazlish’s post illustrates that people will probably not compare to 0 and instead to recent trajectories (“I got a 3% raise last year, what do you mean my raise this year is 2%?!”), so #1 means people will be dissatisfied. #2, as it bore out in the data, also means dissatisfaction. And #3, largely due to timing, means further dissatisfaction.
Then it is no surprise that exit polls show people who were most dissatisfied with the economy under Biden (and assumed Harris would be more of that) voted for Trump. Sure, there’s some political self-deception bias going on (see charts of economic sentiment vs. date by party affiliation), but note that the exit polls are correlational—they can indicate that partisanship is a hell of a drug or that people are rationally responding to their perceptions. It’s likely both. And if your model of those perceptions is inferior in the ways Mazlish notes, you’d wrongly think people would have been happy with the economy.
The fun thing is that the actual profile of wages earned can be absolutely identical and yet end up with incredibly different results for personal wage changes. For example:
In year 1, A earns $1/hr, B $2, C $3, D $4, and E $5. In year 2, A earns $2/hr, B $3, C $4, D $5, and E $1.
A, B, C, and D personally all increased their income by substantial amounts and may vote accordingly. E lost a lot more than any of the others gained, but doesn’t get more votes because of that. 80% of voters saw their income increase. What’s more, this process can repeat endlessly.
If in year 2, A instead earns $5/hr, B $1, C $2, D $3, and E $4 then 80% of voters will be rather unhappy at the change despite the income distribution still being identical.
Exactly, which is why the metric Mazlish prefers is so relevant and not bizarre, unless the premise that people judge the economy from their own experiences is incorrect.
The critique that the justification wasn’t great because the mean wage dropped a lot in the example is fair. Yet, in the proposed alternative example it remains quite likely that people will perceive the economy as having gotten worse, even if the economy is objectively so much better − 2⁄3 will say they’re personally worse off, insufficiently adjust for the impersonal ways of assessing the economy, and ultimately say the economy is worse.
Neither Δ(MedianIncome) nor Median(ΔIncome) is a bizarre metric.Δ(MedianIncome) may be great for observers to understand general trajectories of income when you lack panel data, but since people use their own lives to assess whether they are better off and in turn overweight that when they judge the economy, Median(ΔIncome) is actually more useful for understanding the translation from people’s lives into their perceptions.
Consider a different example (also in real terms):
T1: A makes $3, B makes $3, C makes $3 ,D makes $10, E makes $12
T2: A makes $2, B makes $2, C makes $3, D makes $9, E makes $16
The means show nice but not as crazy economic growth ($6.20 to $6.40), and the Δ(MedianIncome) is $0 ($3 to $3) - “we’re not poorer!” However, the Median(ΔIncome) is -$1. And people at T2 will generally feel worse off (3/5 will say they can’t buy as much as they could before, so “this economy is tough”).
Contrast that with (still in real terms):
T1: A makes $2, B makes $2, C makes $4 ,D makes $10, E makes $12
T2: A makes $3, B makes $3, C makes $3, D makes $10, E makes $12
The means show nice but not as crazy economic growth ($6 to $6.20), and the Δ(MedianIncome) is -$1 ($4 to $3) - “we’re poorer!” However, the Median(ΔIncome) is $0. And people at T2 will generally feel like things are going okay (only 1 person will feel worse off).
And these are comparing to 0. Mazlish’s post illustrates that people will probably not compare to 0 and instead to recent trajectories (“I got a 3% raise last year, what do you mean my raise this year is 2%?!”), so #1 means people will be dissatisfied. #2, as it bore out in the data, also means dissatisfaction. And #3, largely due to timing, means further dissatisfaction.
Then it is no surprise that exit polls show people who were most dissatisfied with the economy under Biden (and assumed Harris would be more of that) voted for Trump. Sure, there’s some political self-deception bias going on (see charts of economic sentiment vs. date by party affiliation), but note that the exit polls are correlational—they can indicate that partisanship is a hell of a drug or that people are rationally responding to their perceptions. It’s likely both. And if your model of those perceptions is inferior in the ways Mazlish notes, you’d wrongly think people would have been happy with the economy.
The fun thing is that the actual profile of wages earned can be absolutely identical and yet end up with incredibly different results for personal wage changes. For example:
In year 1, A earns $1/hr, B $2, C $3, D $4, and E $5.
In year 2, A earns $2/hr, B $3, C $4, D $5, and E $1.
A, B, C, and D personally all increased their income by substantial amounts and may vote accordingly. E lost a lot more than any of the others gained, but doesn’t get more votes because of that. 80% of voters saw their income increase. What’s more, this process can repeat endlessly.
If in year 2, A instead earns $5/hr, B $1, C $2, D $3, and E $4 then 80% of voters will be rather unhappy at the change despite the income distribution still being identical.
Exactly, which is why the metric Mazlish prefers is so relevant and not bizarre, unless the premise that people judge the economy from their own experiences is incorrect.