The Electric Commentary

Monday, January 31, 2005

Krugman oversimplifies.

On Friday I linked to Pauly K's NYT column in which he claimed that the President misused a statistic regarding the life expectancy of African Americans. The President did indeed misuse that stat, but so did Pauly:

True, life expectancy at birth isn't the right statistic but neither is life-expectancy at 65. Consider the following simple example: suppose that 95 percent of blacks die before the age of 65 but that the 5% who survive to 65 have the same life expectancy as whites. Krugman would then claim that social security isn't discriminatory, but that would be absurd - 95 percent of blacks would be paying payroll taxes for all of their working lives and in return they would receive nothing.

As HedgeFundGuy points out a more relevant measure of life expectancy for social security is life expectancy at 20, when working-life begins, and at this age black life-expectancy is still a significant 6 years less than that of whites.

Life expectancy isn't the only thing that affects social security redistribution, however, marriage rates, number of dependents, disability, income and even the time pattern of income matter also. It may be that when all of these considerations are taken into account that on average social security is no worse a deal for blacks than for whites but this will be true only because social security is a hash of redistributionist tendencies few of which are well understood let alone well justified.

(From Marginal Revolution).


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