Let’s start by looking at this chart below. It shows the differences in state-level ratios, contrasting the typical incomes at the top 1% versus the typical incomes at the bottom 1%… the Economic Policy Institute (EPI) chart above has a clear concordance between income dispersion and the population size itself.
Pointer from Tyler Cowen.
My question is this. Suppose that we ignored the actual geography of states, and instead we produced artificial pseudo-states by taking random samples of all U.S. data. We took one sample the size of Texas, and called it pseudo-Texas. Another the size of Vermont, and called it pseudo-Vermont. etc. My guess is that the pattern of inequality across pseudo-states would look a lot like the pattern across actual states. If that is true, then there is not really much information in the pattern of inequality across states.
Not a chance. If you’re drawing a random person (with or without replacement) from the whole US population, each person being equally likely, ignoring geography/locality, (repeat [vermont population] times for pseudo-vermont, etc), every state will look basically identical.
Not if you measure inequality by taking some top-to-bottom measure
I don’t believe I have ever seen an actual map, complete with geographical/jurisdictional boundaries depicted, that is, at once, so completely devoid of meaningful, actionable information, while being so infinitely rich in potential for misinformation. (But I think Salil Mehta already said that.)
To me, the most frightening aspect of this is, “Everyone from the press, to news readers, gawk at how much each state’s levels are, in relation to the levels of other arbitrary states.”
I think there probably is a correlation, but it goes the opposite way (and has more to do with population density in pockets). It is undeniably easier to make a large fortune in a highly populated area than in a lowly populated one- think sports. The NYY can pay A-Rod 30 million per year, but the North Dakota Non-Existants can’t even come close to that dollar amount. If someone of his talent was born in ND he would either have to take far less money to stay in that state, or move and skew the income distribution in NY.