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January 05, 2005

I Have Messed Up: Peter Gosselin of the LA Times and Income Risk

I failed to notice when the galleys came through that the final version of Steve Cohen's and my Atlantic Monthly piece, "Shaken and Stirred" (January/February 2005), does not refer even once to the truly excellent work on risk, uncertainty, and living standards by Peter Gosselin of the Los Angeles Times. Steve's innocent--I volunteered to take on the task of checking the galleys to be sure everything was OK. The Atlantic's editors are innocent--they live in a different universe, and don't understand the magnitude of the academic offense that is a failure to properly cite the people whose work and ideas you are using.

But I am guilty. So, for the record, and in inadequate recompense, let me state that our January-February 2005 Atlantic piece ought to have prominently cited the work of Peter Gosselin and of his collaborators and assistors, notably Robert Moffitt, Greg J. Duncan, Richard V. Burkhauser, Marianne Page, and Ann Huff Stevens. It can be found at:

How Just a Handful of Setbacks Set the Ryans Tumbling Out of Prosperity
The Source of the Statistics and How They Were Analyzed
If America Is Richer, Why Are Its Families So Much Less Secure?
The Poor Have More Things Today -- Including Wild Income Swings

The Times has tried to gauge the effect of this risk shift over the last 25 years by tracing the rising volatility of family income.

During the early '70s, the inflation-adjusted income of most of those in the middle of the economic spectrum — making about $50,000 a year in today's terms — bounced up and down by no more than $6,500 annually. By the beginning of this decade, those fluctuations had climbed to as much as $13,500, the newspaper's figures show. At the same time, the increase in volatility has been far greater for the working poor, while even top earners haven't been immune from ever-larger income swings.

To supplement these findings on income volatility, the paper looked at specific income-rattling experiences. In conjunction with Page and Stevens at UC Davis, it explored how frequently a representative sample of families was hit by any of seven common but potentially destabilizing events. They were: divorce or separation, a decline in a spouse's work hours, death of a spouse, birth of a child, retirement or disability of the main breadwinner, unemployment and serious illness.

The Times then assessed what fraction of the families touched by any of these episodes suffered a 50% or greater decline in their annual income. For every type of setback, the size of the group that took such a huge financial hit climbed substantially between the 1970s and 2000. This occurred even though the odds of at least one of these events befalling a family over the course of a decade remained fairly constant, at about 1 in 5.

For example, among families in which the head of the household was unemployed for two months or more, 13% watched their income shrink by at least half during the '70s. But in recent years, that number surged to 27%....

Posted by DeLong at January 5, 2005 10:09 AM

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Comments

Brad,

I hope you would agree that the first thing we should do is get everyone in the water, without life boats, including, first, tenured faculty.

Nothing is perhaps more dividing in American than tenure for faulty.

Posted by: Moe Levine at January 5, 2005 10:32 AM


Agreed! Nothing is worse than tenure for Faulty! Let him build his own damn towers!

Posted by: john c. halasz at January 5, 2005 10:43 AM


What's so bad about tenure?

Posted by: Macneil at January 5, 2005 11:04 AM


Because tenure means "holding", sort of. In other words, it represents the grip of the eeeeevil liberal faculty on the minds of brainwashed liberozombie students. Down with tenure!

Posted by: Mandos at January 5, 2005 11:49 AM


And how do you get talented individuals to hyper-specialize themselves into a thin and relatively unrewarding business without tenure?

Posted by: Jean-Philippe Stijns at January 5, 2005 01:34 PM


the recent economist article also has a bunch on this...

http://economist.com/world/na/displayStory.cfm?story_id=3518560

also see...

http://businessweek.com/print/magazine/content/03_48/b3860067_mz021.htm

and...

http://slate.com/Default.aspx?id=2060739

Posted by: glory at January 5, 2005 02:43 PM


You should write the Atlantic a correction to be published in a forthcoming issue, Dr. DeLong.

Posted by: A Radcliffe at January 5, 2005 02:51 PM


Flash! This just in. "Tenure is soon to be obsolete as improvements in technology now make it possible to outsource teaching jobs to India where, conveniently, they speak English" said an unnamed source. "But, not to worry", the source went on, "the benefits of an open market economy are not in question and this area is no exception."

Posted by: Dubblblind at January 5, 2005 03:42 PM


Brad,

From just the few points that have gone up it appears I may be on to something.

Those of us out in the real world have known for a long time that we are living through ever-larger income swings, more and more fear, doubt and uncertainty in our economic lives.

The "elite" -- faculty, media, those in politics don't seem to be suffering with us.

In sum, my 2 cents is that maybe why there is red/blue is that red is living through the uncertainty you describe while blue appears to be immune and hence why the class warfare care of the elites sticks.

Posted by: Moe Levine at January 5, 2005 04:39 PM


Ah but Prescott assures us that all these swings are simply due to people taking their crack at writing The Great American Novel.

And Cheney has identified the less lexical as Ebayers.

So don't worry, be happy!

Posted by: a different chris at January 5, 2005 04:46 PM


The article about the Ryans never states the plain conclusion that it builds toward. With the exception of the cancer, their "setbacks" didn't just happen, like a tsunami, or even the vague winds of globalization or deregulation. In just about every case they were the direct result of executive misbehavior, malpractice and fraud.

As we have learned recently, mis-statements of profits on a scale that can sink a company don't just happen. They are a result of criminal behavior.

The article makes clear but seems afraid to say that the woes of the middle class are due to the fact that this country is ruled by a thieving class that is simply robbing us of our lives.

Posted by: Steve Huntley at January 6, 2005 09:34 AM


"In sum, my 2 cents is that maybe why there is red/blue is that red is living through the uncertainty you describe while blue appears to be immune and hence why the class warfare care of the elites sticks"

To react to this situation by voting for the Republican Party would seem to me to be a curious method of dealing with the problem.

Posted by: dsquared at January 7, 2005 12:48 AM


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