Tuesday, March 12, 2019

All arguments can be made to look reasonable as long as you commit GBH on the data

From The Spirit Level Delusion by Alex Tabarrok.

The original thesis in the spirit level book was that all societal problems increase with rising income inequality.

As I have noted many times, income inequality rises with societal prosperity and that, as long as all boats are rising, even if they rise unequally, then it is hard to see the source of alarm. Especially given that the only times when modern economies revert to lower inequality is as a result of famine, plague, war, or societal collapse. Venezuela at this moment probably has the lowest GINI coefficient in the western hemisphere, proving once again that the cure is worse than the putative disease.

I did not read the original Spirit Level book when it came out simply because it looked like the regular delusional writing by ideologues so caught up in their utopian fantasy that they can never deal with empirical evidence. As the rebuttal book makes clear, skipping their argument was a good call.
In summary, most of the biggest claims made by Wilkinson and Pickett in The Spirit Level look even weaker today than they did when the book was published. Only one of the six associations stand up under W & P’s own methodology and none of them stand up when the full range of countries is analysed. In the case of life expectancy – the very flagship of The Spirit Level – the statistical association is the opposite of what the hypothesis predicts.

If The Spirit Level hypothesis were correct, it would produce robust and consistent results over time as the underlying data changes. Instead, it seems to be extremely fragile, only working when a very specific set of statistics are applied to a carefully selected list of countries.

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