Sunday, October 17, 2010

Income Inequality Revisited

The New York Times has an article reporting research on unhappy correlates of increasing income inequality. The three correlates mentioned in the article are increasing divorce rates, commute times, and bankruptcy filings, all of which were greater in counties with greater income inequality.

Let's suppose the research is well done and the findings are accurate, all of which may not be true. I suspect that the researchers went looking for social pathologies that correlated with income inequality, and if they found more than three they didn't list them here.

Let us imagine some other social pathologies for which they (apparently) found no positive correlation: crime rates, suicide rates, delinquency rates, school dropouts, house fires, injury accidents, termite infestations, outbreaks of head lice, etc.

Now let's ask the question, did they go looking for any correlations with social non-pathologies, with good outcomes? Or did they find that these same counties with greater income inequalities had negative correlations with any social pathologies, negative correlations they didn't report because they didn't support the model?

I suspect they had a model in mind, namely "income inequality => social pathology" and went looking for relationships that supported that model. That is what social scientists do, as I well know, having spent 30 years doing it myself.

Suppose you asked the reverse question - income inequality => desirable outcomes - could you find at least as many correlates there? For example, it is possible that unemployment rates are lower in such counties, lifespans are longer, home ownership is more widespread, etc.

Another question the article doesn't answer is whether the findings are correlational or done in such a way as to demonstrate causality. For example, does rising income inequality cause rising divorce rate or does rising divorce rate cause rising income inequality, or does some third, unknown factor cause both?

I think a reasonable argument can be made for rising divorce rates causing rising income inequality, rising bankruptcy rates, and rising commute times. Two people divorce, causing financial turmoil, often leading to greater income disparities, the formation of two households where one existed before, and increased commute times as both households are poorer and must live where housing is cheaper - farther from downtown.

The bottom line: read social research cautiously, particularly if the findings support your biases.