you’ll laugh, you’ll cry, it’ll change your life

KRUGMAN, RIGOROUS ECONOMIST

Ok, I realize his blog is not a serious academic paper but really. He got the nobel prize for Gods sake.

Poor Texas
Matthew Yglesias notes that Tom DeLay is under the strange misapprehension that Texas is rich thanks to its low taxes and lack of regulation.

Just one minor issue: you really shouldn’t use median income, which can be distorted to the extent that inequality differs across states. You should instead use income per capita. As it happens, the comparison is even more striking. Texas, with its glorious free market regime and deeply incentive-creating 25 percent rate of health uninsurance, has a per capita income of $37,187; nanny-state New Jersey, with its oppressive taxes and regulation of everything (what it takes to get permission to cut down a dying tree … ), has a per capita income of $49,194.

Ah, so cost of living isn’t important? Based on this quick comparison with data from this site I come up with this result.

The cost of living in Texas is about 70% that of New Jersey. The income (per capita) is 75%. I’m sure there are more pertinent facts to bring to bear but calling out simple income as a measure of wealth is ridiculous. But what do I know? I don’t have a nobel.

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2 responses

  1. Oh my God. Sometimes I think I should make a career out of saying stupid things; I’d be feted with university sinecures and Nobel prizes, if Paul Krugman (and Peter Singer, and Al Gore, and Paul Ehrlich) are anything to go by.

    Failing to account for the cost of living is already laughable, but Krugman is also failing to do simple math. The low taxes he mocks also mean that the Texans are keeping more of their income. The New Jersey residents have a higher gross income, but more of it is being siphoned off by taxes (as well as the high cost of living.) Therefore I wouldn’t be surprised if Texans are richer overall.

    I can’t believe Krugman can’t distinguish between real and relative incomes. I suppose he’d also tell us that we’re twenty times richer than 1950s Americans because the median income today is $50K, compared to $2.5 K back then.

    Again, I have to wonder if they believe this crap they’re writing, or if it’s some elaborate joke?

    April 20, 2009 at 7:46 pm

  2. Also, isn’t Krugman supposed to be opposed to greater wealth? By his calculations shouldn’t the free-market Texans be closer to his ideal?

    April 20, 2009 at 7:55 pm

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