Via WSJ:
The White House’s top economist on Thursday said income inequality in the U.S. has reached the point where the “middle class has shrunk.” He said the development was “causing an unhealthy division in opportunities, and is a threat to our economic growth,” according to prepared remarks…
The consequence of a shrinking middle class, Mr. Krueger said, was “more families falling into either end of the distribution, and fewer in the middle. The statistical word for this is ‘kurtosis.’ I can see why the term polarization has caught on.”
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January 12, 2012 at 7:41 pm
Dave Backus @ NYU
I guess we’ll have to change the Wikipedia definition — or maybe he did already.
January 13, 2012 at 6:45 pm
Jonathan Weinstein
Just looked at Wikipedia…their definition(s) look right to me. Krueger is (half) wrong. Compared to a normal distribution with the same variance, a distribution with high kurtosis will have fatter tails *and* a sharper peak in the middle, so less mass around 1 std. dev. from the mean.
We could salvage Krueger’s statement if he said that the variance *and* kurtosis had increased. This is what happens if you simply move mass from the center to the tails. Of course the income distribution is highly asymmetric, Krueger could probably also have said that the skewness is increasing.