Thinking about income
- What income distribution is "fair"?
- Sketch a histogram that represents what you believe to be the income distribution in the United States
- Include your guesses for the mean and median income
- Sketch a second histogram representing what you think should be the income distribution in the United States
- Include the mean and median income, and describe the shape, center, and spread of this histogram
- Give justification for what you think income distribution should look like
- What data would help us understand the situation?
- What limitations might we have in obtaining this information?
Let's look at the data!
- How might we want to represent this data?
- Notice that the bin corresponding to the greatest incomes does not have an upper limit.
- What might we choose as an upper limit? How could we justify this?
Analyzing the data
- Estimate the mean and median incomes. How do they compare, and why?
- What assumptions did you need to make to estimate the mean and median?
- Are these reasonable assumptions?
- What do these histograms tell us about income inequality in the U. S.?
- What surprises you about income inequality in the U. S.?
- How do we deal with the uppermost income bin being unbounded?
- How does using the lower, midpoint, or upper points of each bin interval affect the mean and median incomes?
- How does data presented in bins affect our calculating the mean and median of the data?
- Does it make histograms easier/ harder to create?
- What, if anything, do we gain (and what do we lose) from the presentation of data in this form versus the raw data?
- Who gets to choose the bin sizes?
- Median U. S. household income is $51324, and mean U. S. household income is $70909.
- Why might these be higher than the AGI data that we have?
- What might we hypothesize about the income distribution of households? (more skewed, less skewed, and why)