Economic literacy is no common thing. In fact, you can find downright dumb economic statements almost everywhere. And not just in places you would expect, like Congress. But also in reports from financial industry analysts, and articles from business reporters.
Consider, for example, a Research Affiliates article that made the rounds recently. The article included a factoid that was designed to be quoted just like this:
Three US billionaires are now collectively worth more than the 160 million Americans in the bottom half of the wealth distribution. ... few of the bottom 160 million hold any stocks or bonds.
Writers for Institutional Investor and Fox Business both quoted it. They probably weren't thinking about it very carefully. Because if you know a couple basic things – the approximate population of the United States, and the approximate age distribution of a population – you know it's not worth quoting. It might be a fact, but it's not meaningful. It's just silly.
It's true that half the United States population would be about 160 million people. (The population of the United States was estimated at 329 million in July 2018.) But most of the people "in the bottom half of the wealth distribution" are children, or young adults who are no more than a few years into their careers.
Check out the estimated age breakdown of the United States population:
- 0-14 years: 18.62%
- 15-24 years: 13.12%
- 25-54 years: 39.29%
- 55-64 years: 12.94%
- 65 years and over: 16.03%
People between 0 and 24 years of age account for about 32% of the United States population of 320 million. Almost all of them are going to be in the bottom half of the wealth distribution for reasons including diaper rash and puberty. That means they account for about 63% of the "bottom half of the wealth distribution". Should it surprise us that some kid fresh out of college does not have much wealth? Or a kid fresh out of the womb?
Then we must consider people with mental and physical disabilities. They will also tend to be in the bottom half of the wealth distribution because they face greater challenges to building wealth. "About 56.7 million people — 19 percent of the population — had a disability" at last count, according to the United States Census Bureau. But there is overlap between the disabled 19% and the young 32% of the population. If we assume disabilities are evenly distributed in the population, then young people and non-young disabled people account for 45% of the population. So we have now accounted for 90% of the "160 million Americans in the bottom half of the wealth distribution".
Next we must think about other groups who have had limited wealth-building opportunities. What about the 2.2 million people in jail and prison? What about people in their late 20s who pursued PhDs, law degrees, medical residencies, etc., and are just beginning their careers? Now we are close to accounting for 100% of the "bottom half of the wealth distribution." But this wealth distribution is not what any sensible person would expect it to be.
Maybe the factoid is true. Maybe Jeff Bezos, Bill Gates and Warren Buffet have more wealth than all the infants, children, students, handicapped, prisoners and postgrads combined. Would that be surprising or useful knowledge in any way? Should it bother us that "few of [them] hold any stocks or bonds"? Doesn't seem like it. Even if the factoid is true, it's dumb.
Next time you encounter an economic factoid, remember that it might be pitting a bunch of newborns against Jeff Bezos. And that hardly seems fair. If we have any chance of saving those babies from certain defeat, we have to get economically literate!