Monday, April 25, 2011

What a Difference a Graph Makes

I've previously made a case for plotting your data before you model them. But not all graphs are created equal. In this regard, I liked Nick Gruen's re-working of Paul Krugman's graph on the tax burden in the U.S. Same data - opposite conclusion! Take a look at Nick's posting,  'Zombie Tax Lies' at the Australian site, catallaxyfiles.com.

The Devil is in the details!

p.s.: Thanks to Sinclair Davidson for letting me know that the re-drawn graph actually originated with him - see the coments to this posting.


© 2011, David E. Giles

5 comments:

  1. Why should the Nick Gruen's graph go against the claim that "the overall system is barely progressive at all"?
    I don't think I'm catching the point.

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  2. Mistaken identity - Nick reproduced the Krugman graph, I restated it.

    Thanks for the link.

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  3. Sinclair - my apologies - thanks for clarifying that!

    DG

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  4. I don't get the point either, honestly. The point in the PK's graph is to show if the system is progressive. From the PK's graph it seems that there is little difference between rich and middle class, in proportion to their income.

    Did someone think, looking at PK's, that the top quintile has an income between the third and the forth quintile? That would be quite strange.. being, you know.. quintiles...

    PK's graph seems just more specific, I don't get any less information, I get just a few more. I am missing the deceiving point.

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  5. I don't know enough about the issue to have any deep insight, but since the weight of the policy debate is on how to tax upper income earners (i.e. >=250K, roughly top 2% on the distribution), I think Krugman's groupings make more sense since it provides the data to inform the debate. I don't like the 20% groupings at any level, but especially toward the top. Does it really make sense to group people making 70K with those making >1.5mill?

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