New York (Texas and Tennessee) fact of the day

The median household income in the city of New York is a few hundred dollars a year more than the median household income in the state of Texas, but in practical terms the average New York City household is much worse off.The most obvious issue is the cost of housing, which for New Yorkers is about four times what it is for Texans.

That is from Kevin Williamson, who stresses that New York City is actually a relatively poor place.

By the way, New York and DC have Ginis reflecting more inequality than what we find in Mexico or Nigeria.  Manhattan and Putnam County, Tennessee have Ginis almost as high as that of South Africa.

Have I mentioned that a Gini coefficient isn’t a very good measure of inequality for most purposes?  It does not command much loyalty from people who actually work in that area (generalized entropy measures are much more popular), yet it has become a staple of discussion in popular economics.

Comments

I'm from Putnam County - it's the one in the Tom Waits song. It's a town of farmers and low-level manufacturing workers along with university professors (go Tennessee Tech Golden Eagles!) and the doctors at the regional hospital. If college students are also counted (can't tell from tweet), the Gini coefficient is probably not a good indicator.

Indeed, this is a classic example of how bad the Gini coefficient is. If Putnam county could just force that major university to leave, it's Gini would be great!

That being said, I doubt the veracity of this data, Here's a source that lists every county in the country (by family income in 2000). Putnam County, TN has an unremarkable Gini of 0.413.

http://csivc.csi.cuny.edu/Thomas.Volscho/files/counties.htm

It lists New York, NY as the highest county in the US with 0.584.

0.413 is not unremarkable. Some consider 0.42 to be a threshold beyond which major social tensions, so far as revolution, may arise. When the Gini goes much beyond that, you might assume that governments will have to engage in "excessive" repression to keep people in line.

But broadly speaking, I agree that the Gini is not that useful of an indicator. As a quick snapshot, sure. As a simple tool to teach in first year classes, sure.

Actually, I think the more significant issue there is whether focused on income or consumption. Consumption-based approaches are more likely to pinpoint areas where the is cause for concern. People who are relatively poor may not be so stressed out if they can access diverse public services and be able to participate in their communities. Basically, this is endorsing efforts to make real the capacities and functionings approach of Amartya Sen.

Sounds like New York needs to do something about the price of housing! They should probably institute price controls, but those sound so bad.........what about..............rent control? That should do the trick! Everyone knows that if anything makes housing affordable, it's the government demanding that it be cheap!

It seems like you're trying to be sarcastic here, but I'm not sure what your point is. Obviously rent control would lower housing prices, especially in places like New York where it's difficult to produce more housing stock, and what is being built is heavy on the luxury apartments and light on affordable places to live.

"Obviously rent control would lower housing prices, ... and what is being built is heavy on the luxury apartments and light on affordable places to live."

LOL, Cause meet Effect.

Tell us Quite, why can't the government just make all rents $1 per month? Obviously that would lower housing prices. And while they're at it they can raise the minimum wage to $1 million dollars an hour, which would obviously raise the income of our poorest Americans.

Maybe they should also require 52 weeks of vacation pay.

We already have this: long-term unemployment insurance followed by Social Security disability. It only provides nice vacations, though, for people already on government pensions.

That's it, I retire from satirical strawmanning. I don't think one can reliably do it to leftists. I guess I'll just have to resort to direct mockery. Sustainable, of course. In the community.

At first I thought this was a royal troll from an experienced reader, but looking at the Website.. I think it is sincere.

Q. Likely, before embarking on your legal career, I'd suggest looking at the constraints to housing supply in Greater NYC, and which of them are legal in nature vs. economic. Next, examine which of those laws are designed to protect the interests of entrenched incumbents, vs. provide social justice. I hesitate to ruin the surprise with a pithy statement about regulatory capture.

Then the people who can't afford it either:
A. Need to get out or B. Earn more income.

Does it occur to you that rent control is trapping people in places where they cant afford anything other than rent? It is also keeping down wages.

Tiny houses and light rail.

NYC is basically college.

Interesting case. Were NY to put a cap on rents, what would happen? Less marble? More fancy cars?

That would be a very interesting extension to 1st year economics logic.

ny apologists would then say nontradable goods like Afghani restaurants or seeing famous people make up for cramped housing, hard to quantify either way. But yes it seems correct and worth mentioning that city dwellers do have impoverished physical living standards, and only then wonder whether the nonphysical side of things copensate appropriately.

Considering that people would much rather live in NYC than rural Montana...

Even yet, the vast majority of Americans choose not to live in NYC. (97.5%). Maybe all of them just couldn't hack it there.

What percentage choose to not live in rural Montana?

Is it more or less? I bet it is more.

Enough people go to live in rural Montana that Jared Diamond has written a book chapter about how civilisation is collapsing there because of all the population pressure. It's a fine chapter, you should reed it.

If you can't hack it there can you make it anywhere but there, or nowhere?

Not everyone.

But the variance from city to city is tremendous. Housing costs in Chicago are probably half of those in NYC or DC, and Chicago still has great (and many) ethnic restaurants and cultural institutions. I wouldn't be surprised to learn that the difference is in housing policy. Chicago seems to have had no problem with lining the lakefront with giant highrise apartment buildings for miles and miles near the city center. The result is affordable urban life for upper-middle and middle class professionals, and probably also poorer folks as well. A two-bedroom apartment in a fairly modern high-rise (less than 30 years old) within walking distance of the L and a lakefront view can be had for $1700 / month. Find that in DC or NYC.

Or maybe that Chicago has seen decades of population loss?

Maybe, but the greater Chicagoland area hasn't lost population; its grown quite a bit. And inside city borders proper, places like Boston where housing is expensive have also lost population, with no corresponding drop in housing prices.

Yes, my old building in Chicago (before I had a house), about 7200 square feet, had 52 residents when it was a tenement house, but now it has six yuppies. How sad for the human race. #sarcasm

NY doesn't have a lake.

Oceans need not apply.

Nor large rivers.

FWIW, I also suspect a positional goods problem here.

Chicago would've paid me $45K, Bay Area pays me 3x that. (Taxes suck, but it's still a nice 2.5x)

BUT. In the Bay Area, most of the major cities have 3 jobs:1 household. Which means that no matter what, half the population cannot live in those cities (and by sheer transitive property, many must live out past the mountain passes somewhere and have 3 hour commutes).

Therefore, housing prices will rise with salaries as far as is necessary until people stop trying to live within an hour of work (Now, us sane people would say "Build more housing", but it's CA. And in all fairness, there's fairly significant infrastructural issues related to immediately doubling the population and figuring out how to move them around the region). Even if that means that a house in Gilroy is a half mil, and a townhouse in Mountain View is $1.5 Million.

So are Chicago prices lower because Chicago salaries are lower and people have less money to bid up the housing, or are Chicago salaries lower because people don't need as much money to pay rent? (Or both?)

Other factors may come into play.

Year round fog sucks but several -18 degree ambient days have ever fewer takers.

Both. And more.

I lived in SFBay for 5 years and Chicago for ten.

SFBay is gorgeous, world class. So, worldwide strivers are attracted there, if for nothing less than the views. SF, Santa Cruz Mtns, Marin, Tahoe, Napa all within striking distance of a (not quite) world class city and airport. So the worldwide moneyed class bids for housing in SF, not as much Chicago.

Plus the Valley + SF are (the current) centers of wealth creation, so otherwise upper-middle class people (smart engineers and marketers), with luck, can pay $2M cash for that Noe Valley 1500 sq ft victorian.

But the "Valley middle class" of engineers etc that forms the backbone of this value creation need to be recruited. The good spots are taken by the global rich and the new money elite, so they bid for the Sunnyvale townhouses. Prices go up, recruiting becomes problematic, pay goes up, prices go up.. and you're paying $5,000 for a two bedroom in basically the suburbs (albeit very nice suburbs within 2 hrs of the ocean and 4 hrs of the mountains).

For me, the key metric: where are the families? Other than the real rich, the most of Valley Middle Class of $180k/yr engineers move away a couple years after the first kid.

The long term picture of SFBay? Really rich people and business leaders. Young talented people living in studios at high prices. And, high-productivity mid-career engineers and managers working remotely (rural Montana?) most of the time, with stints on location to soak in the vibe and drink the kool aid. One month a year solo in company apartments for the mid level people, two years in large townhomes with families for executives, then B2C (back to Chicago).

Note that I see this as a positive development.

The one thing that drives me nuts whenever I go visit my parents who just moved to Marin County is the lack of commuter train from SF. The traffic!

NYC actually has quite a lot of highrise apartment buildings; I'm not sure I quite believe the assumption that Chicago has more housing supply. In any case, housing policy friendly to construction doesn't matter much when demand always outstrips supply.

I think NYC is the end game for SF - from my visits, it seems like rent prices are somewhat inflated because 'nice' housing acceptable for the well paid internet/tech newcomers is in short supply, but there's actually quite a lot of room in sketchier neighborhoods my friends currently wouldn't live in - eventually gentrification putters along, developments go up, and then you have the SF Lower East Side. SF becomes Manhattan. (Whether this is something SF residents would desire, well, I don't know.)

Chicago's lake constraint is, while not insignificant, not in the same class as the islands of NYC.

Much relief to job-proximate house prices is provided by Naperville, Hoffman Estates, Schaumburg with good schools, 0.2 acre lots and express trains to the Loop.

Despite all the talk about culture and restaurants, it seems that trendy housing in nyc is at least something of a veblan good for privileged white 'artists' (see: jezebel.com staff) and foreign capitalists/ regulatory bandits.

Yeah. Privileged white website artists making $60k are living in luxury Veblen housing in NYC.

Worth mentioning that that "median income" figure includes some 600,000 public housing residents in the NYCHA housing projects earning near-zero incomes...

People go to NYC out of college to "make it." The city is full of strivers. So it makes sense that a lot of people are relatively poor taking into account housing because they either:
1. Expect to make significantly more in the future or
2. Expect to leave after they've run up the career ladder twice as fast as they could have elsewhere.
3. Move to the suburbs after reaching a reasonable income
4. Fail to "make it" and move wherever
5. Moved to NYC because that's where all their friends are, leaving once they all start having kids or moved out.

People don't take entry level jobs because they expect to stay in them forever, housing prices be damned. Note not everyone striving here is in finance. This includes arts, media, medicine. Those who don't expect to make more money (taxi drivers for example) live outside the very expensive core..

Also, comparing median income to "housing costs" - I don't know the methodology, but that sounds like housing costs is an average. Perhaps comparing median to median would be more appropriate? The article didn't make it clear.

I used to think that people just went to NY to take it up the butt for a few years so that people would take them seriously. But then I observed that the only two people I know who spent much of any time working in NY (an artist and an architect) are respectively the best among their peers

"New York City is actually a relatively poor place"

No, it isn't. Part of the reason it costs a lot to live in a place like NYC is that *you get to live in NYC*, with all the access to good things that entails (museums, variety of cuisine and culture, etc). Yes, there are also restrictions on building and rent control, but to say "oh, you people who live in a desirable place, you're so poor because it costs to much to have this desirable location" is silly. Brad Delong had a post along these lines a couple years ago; can't seem to find it now.

Bloomberg's nom de plume revealed.

Cost of living is an illusion. Intangibles are everything.
Everyone loves museums and not being able to drive.

I see your irony, but being able to live without a car can actually be a huge advantage. I have met a surprising number of people who moved to NYC/other big cities who have never had a driver's license.

Canned SWPL response if I've ever heard one.

Austin isn't as cool as NYC but it's probably 75% as cool, so your argument just doesn't overcome the housing disparity. And overall the issue isn't the small swath of people who love the Met and good Jamaican food, the issue is the millions of people who just want a home for their family and a decent school to send their kids to.

Eric S.: "...the issue is the millions of people who just want a home for their family and a decent school to send their kids to."

Then, why are they still in NYC? What's keeping them there? Why do they stay? No one's forcing them to.

It's not about the small swath that loves the Met and Jamaican food, it's that whatever you love in this world, you're likely to find it in NYC. And if next month you change your mind about what you love, you can still have it, because it too is probably just a $2.50 subway ride away.

I would like to personally build a patio in my backyard. What ticket do I buy?

You'll want to the LIRR to Ronkonkoma. The ticket is going to be a little more than $2.50 though.

The city has tens of thousands of porches!

=) Point being, what you love might not be what I love -- and these economists have trouble measuring that whether in NY, Texas or Tennessee.

Totally. Just pointing out that NYC has a lot more different kinds of opportunities and things to do and see than most other places, which probably has a lot to do with why so many people choose to live there.

It's all about museums. That's why people live in New York, so they can make regular trips to MOMA, which supposedly get 3.1 million visitors annually out of a population of a little over 8 million. None of these visitors are tourists, either.

It's funny though. There obviously is some odd, but apparently real, psychological benefit from being *near* Moma, *near* Broadway, etc., even if you don't actually go there constantly. Same concept in DC; I may not have political power but I drink at the same bars as those who do.

It's that the incomes are high. That's the weird psychological benefit.

Maybe I have a poor sarcasm detector but it is not lighting up with this comment.

There is a smugness / perceived quality of life boost from being in "the center."

Worth repeating: smugness. What is it worth to be allow to condescend to 300,000,000 about their so, so lame, geographical location?

MOMA is, of course, the only museum or cultural center/event in NYC.

That's an excellent point. New York isn't poor, people are just willing to spend a lot of money for the privilege of living in New York.

It was an excellent place to leave.

My quality of life is much better in Chicago than it would have been in New York. I would have been forced into a different line of work had I chosen to stay. Luckily, I landed a clerkship in Chicago, and the rest settled into place.

Can get in some decent jazz without paying $12 for a pint of beer too!

I was willing to spend a lot of money for the privilege of making two or three times what I could have made elsewhere. I saved much of it and am now retired.

The BEA has recently published a set of measures of real per capita income by metropolitan regions that adjust for differences in the cost of living.http://bea.gov/newsreleases/regional/rpp/2013/rpp0613.htm

According to this data real per capita income in the New York area was 133.4% of the national average
in 2011..

This makes it number 55 out of 366. cities.

Interestingly, Midland, Texas is number one and McAllen-Edinburg-Mission, TX…is number 366.

Chicago at 104.75% of the national average is number 74.

That makes it number 33 out of 366metropolitian cities..

Here is the top 12. anf their percent of the national average.

Midland, TX……………………………………………160.60
Bridgeport-Stamford-Norwalk, CT…………………154.48
Naples-Marco Island, FL……………………………144.87
Casper, WY…………………………………………....135.83
Sebastian-Vero Beach, FL………………………......134.50
Barnstable Town, MA…………………………………131.38
Hartford-West Hartford-East Hartford, CT…………126.62
Boston-Cambridge-Quincy, MA-NH…………………126.05
San Francisco-Oakland-Fremont, CA………………125.03
San Jose-Sunnyvale-Santa Clara, CA………………..124.19
Washington-Arlington-Alexandria, DC-VA-MD-… ......121.50
Boulder, CO………………………………………………119.05

Barnstable makes NO sense. It's 90 minutes at best (as in at 3AM) from Boston. That has to be skewed by a lot of weekenders claiming residence to get lower car insurance and less expensive beach passes than if they declared residence in Newton, Brookline, etc.

Thus looks like a lot of wealthy suburbs - places with relatively cheap housing, wealthy people, and long commutes (presumably the last one isn't taken into account?).

Sorry, my mistake ignore the last line about if being number 33.

Also how "good" Texas is is highly dependent on the price of gasoline. Gasoline prices hit the poor in Texas very hard, while they don't make much difference to the poor in New York. One thing economists don't take into account enough is cash flow. If gas is $6/gallon two months of the year and $3/gallon the rest of the year, and a subsidized bus pass is $56/month all year then not only is the New Yorker paying less for transportation, they don't have the price shock and thus won't take out a payday loan to pay for that two months of $6 gasoline.

Unfortunately, the price of gasoline has an effect on people that don't drive cars.

Yes, but quite a bit less than on the people who rely on gasoline to drag a ton and a half of steel around with them to get anywhere.

Less, ok. Quite a bit less? Not so sure.

Yeah, you have a long commute and gas prices go up 20%? You notice it every week (twice a week?) at the pump.

No car commute? Cost of lettuce up 7% Restaurant meals, 13% Fuel surcharge at UPS, 3%. You never notice...but it is there.

Tyler writes:

Have I mentioned that a Gini coefficient isn’t a very good measure of inequality for most purposes? It does not command much loyalty from people who actually work in that area (generalized entropy measures are much more popular), yet it has become a staple of discussion in popular economics.

It has it's place. It's appropriate when considering an entire population, but not subgroups within the population - for example, you can't combine the Gini coefficients for the subgroups and come up with the coefficient for the entire group, which limits its utility.

How does it work better over a large population? Must we only compare the US to the EU, to China, then?
The GC is just a bludgeon to use when it might score points. Why else would one compare two almost entirely dissimilar countries like Sweden and the US so often?

triclops: Time Series Analysis. You can compare today's US to 10/20/30 years ago and have data rather than truthiness.

Gini is also a lot easier to explain to a layman: sort individuals by income, then do a running subtotal, dividing by the overall total -- now you have a Lorenz curve. Compare the curves for "9 waiters and Bill Gates" with "10 waiters", and you can get a visual guide for inequality (although for income, not wealth)

If you need to explain inequality, start with Gini. Then you can point out the limitations. (Granted, most discussions don't seem to get that far.)

I always talk Lorenz curves with Joe, the barber and Steve, the auto mechanic.

At what point do you discuss how bad the Gini coefficient of Iceland would become if Bill Gates moved there? And why that would be bad?

When you're ready to demonstrate why inequality can be very good for society...

I think I'm going to steal your example in the future. :)

I'll also chime in to defend Gini. Most popular discussions use a ratio of whatever arbitrary percentiles best fit the writer's argument, or even worse, CEO-to-worker, however you want to compute that. Gini has the advantage of having a fixed definition and always changing when some person's income changes. I'd love to see it used more consistently in popular discussions.

If only there were a way to measure how desirable a place is to live.

+1

And there is -- it's called housing prices!

That's like saying Tiffany's is the best store, or that Americans prefer Tiffany's to Walmart, because it's possible to pay high prices there. Without accounting for volume, you're missing something important.

I think you need to add up what is spent on something across America to put a dollar value on desirability. If you add up real estate value, or even if you just count noses, it's obvious that Americans prefer moderate density places to high density places and to low density places. Suburbs beat urban _and_ rural living.

I think it's more like saying people like the products at Tiffany's better than the ones at Wal-Mart, which is demonstrated by the fact that they're willing to pay more for them.

I think it's more like saying that there exist some people who like the products of Tiffany's better than those of Walmart, as evidenced by the fact that some people buy products at Tiffany's. Some people really like spending a lot on a watch that still just tells the time. But that is not the norm.

Most people who can afford to buy products at Tiffany's and Walmart buy them at Walmart, measured both by counting noses and counting dollars.

Housing prices work, it is just not clear which way they work. Texas.

Comparing a densely populated urban center to a whole state is rather sloppy logic, though perhaps good polemics.
If Texas is so great, why is it way behind on infant mortality (6.15 for TX vs 5.08 for NY state in 2010). And NY improved more than TX did over the prior 5 years. It is also ahead in obesity rates,

Please elaborate the sloppiness of the logic. I suppose if infant mortality or obesity rates were number one on my list of desirables, I'd choose NY. As for getting the most for my money, I'll take Texas.

The sloppiness is very apparent. State to state on poverty rates, Texas ranks the 5th highest poverty rate.

If you are going by the US Census' Supplemental Poverty Measure, then Texas is 11th, ahead of New York at 7th and way ahead of California, which is first by a large margin.

http://en.wikipedia.org/wiki/List_of_U.S._states_by_poverty_rate

JWatts, See my comment below on adjustments to supplemental index (moves from 5th to 10th worst) and also look at PEW data re income mobility in Texas: if you are poor, you are less likely to ascend, and if you are not poor, you are more likely to descend, relative to other states.

Serves no point aside from bills mood affiliation. We get it, bill, you are a progressive so you love nyc. No need to remind us all with your evidence and argument - free posts.

thomas, I present facts. What did you present.

Yeah who cares about their children's lives, obviously housing costs per square foot are the only factor in deciding where to live.

Facile argument. You can do better.

Due to the huge difference in infant mortality there's a movement in population from Texas to NYC, right? A Texas mommy-to-be would be wise to move to NYC because if she stays in Dallas her child is more likely to be stillborn? A skinny Texan should move to Greenwich Village before none of his clothes fit? It's phony numbers like yours that give people a low opinion of the economics field.

Or maybe New York's median standard of living is really higher than Texas. People obtain somethings of value by living in New York over living in Texas, making New York so much more expensive.

If that was not the case, a lot more poor New Yorkers would be raising their standard of living by moving to Texas than we see now and NY property prices would plummet--with or without NY's regulation.

Or it could be that poorer people are both more likely to have infant mortality and be unable to afford to live in New York.

Convincing people to live in Texas is expensive (adjusted for cost of living).

And having lived there I understand why, though I hear it's gotten a bit better.

Anyone who has ever been to Midland knows why this is true. Of course you could say the same about New York, and now that I think about it, basically anywhere that isn't Santa Monica.

+1

Excellent restatement of assumptions.

And that's why so many people are moving there? It's not an equilibrium

It should be worth noting that people in New York spend much less on transportation than do people in Texas

I find that very hard to believe. It doesn't mesh with my experiences in New York, and more generally, whenever you get close to a metropolitan area commuting costs skyrocket.

In NYC it's a way easier to walk or take public transportation, which is a lot cheaper than a car.

You haven't seen my car. How far does $5/day go for NYC transit?

Pretty far: $112 for a 30 day unlimited MetroCard leaves you $38/month for cab rides and shoes.

Time consuming modes of transportation are expensive.

Ever live in NYC or spend any real time there? Ever consider how many people in NYC have to commute from an hour or so away?

There's no way transportation costs in NYC are lower than in Texas. Not even close.

Transportation in NYC is just like housing in NYC or restaurants in NYC. At any particular price point, it's worse than just about anywhere else in the US. The difference with NYC is that the top-end goes higher up. It's the best place if you make seven figures. It sucks if you scrape by on $250k.

Subway is, what, $2.50 each way? Say $200/month, building in cost for multiple trips some days. A low-end car payment plus gas every month is probably at least $400, not to mention maintenance or any cost to park.

And if you want to count the additional time commuting on public transit as a cost you should probably factor in the quality of the commute as well. I can read or sleep on a subway, and accomplish real work on a commuter train. I would definitely choose that over a driving commute that is half as long spent sitting in traffic twice a day. I've lived both lives. Also note that a lot people enduring those mega-commutes to NYC are actually living in NJ or CT suburbs, though I acknowledge there are some hellish cross-borough commutes that people make.

It's a stupid argument so Jan is here to make it. Don't you plebes know that NYC is cheaper - including values that can't be computed - than anywhere else in the country. It's the same reason that all the cost concious folks drive mercedes. Also outside of NYC is the land of Raceismism.

A low-end car payment plus gas every month is probably at least $400, not to mention maintenance or any cost to park.

Not if you buy used cars.

thom, you're not making any argument and clearly butthurt. RACISM RACISM.

Recently moved from the NY burbs to Houston. My monthly commuting bill went from $650 to $50. Add in (or, perhaps, subtract) the 6-7% of my salary I no longer pay to the state government, and the fact that I could afford to buy a house for cash, and my disposable income just went from about 60% of my salary to about 85%. And in this 6 million person metro, there's no shortage of diverse dining, culture and entertainment options.

Maybe it is all the immigrants? NYC is an arrival point and third world immigrants are going to be doing very basic jobs.. I see a lot of BMWs in Brooklyn and Queens neighborhoods where native New Yorkers live.

Does NY have a higher ratio of poor immigrants than Texas, though?

After all, there isn't a national debate over whether or not we should fence off the banks of the St Lawrence to keep "illegals" out. Texas is one of the biggest destinations for poor immigrants. In fact, is it possible that New York is the home of immigrants wealthy enough to come into the States legally while Texas' immigrants are more likely to be the poorer ones who couldn't afford to take the proper channels?

It's certainly an empirical question of which location's immigrants pull the median down further, but it's certainly an issue that is significant for both places.

NY state is 58% white non-hispanic, 16% black, 7% Asian, 18% Hispanic and 1% "other".

Texas is 46% white non-hispanic, 12% black, 1% Asian and 38% Hispanic and 3% "other".

So NY has far more favorable demographics assuming that America's racial hierarchy is Asian->White->Hispanic->Black.

New York also has far more college graduates and existing capital stock. It shouldn't just be keeping pace with Texas. It should be blowing it out of the water.

New York City is 36% foreign born, as of 2010 Census. In Texas it is above 16%. Texas has a lot of "white Hispanics.".

Have you ever looked at a list of states by poverty rates???

Among the states, Texas has the 5th highest poverty rate in the country.

http://en.wikipedia.org/wiki/List_of_U.S._states_by_poverty_rate

Is that because Texas makes people poor, or because poor people go to Texas to improve their lot?

More that the combination of lots of space, not a lot of zoning restrictions, and being a generally undesirable place to live, make housing costs low, and thus poor people can save money by living there rather than somewhere nicer.

Don't forget the job side of the equation.

HH, Texas would be a poor place for poor to go. It ranks below the average in economic mobility measures. See my comments above.

You mean individual poor people actually have their real compensation reduced? Or some voodoo about quintiles and households?

Actually, if you are in Texas, your relative upward mobility is significantly lower if you live in Texas.

See Pew data below.

Don't ask silly questions like that when Bill is trying to repeat the Daily Kos talking points he heard in the adjunct faculty break room today.

Is your point perhaps that those people were rich before they moved to TX?

LOL Bill. You didn't even bother to look at the last column on the chart you linked to. Try sorting the "Supplemental Poverty Measures" Column. Now re-adjust your priors. ;)

JWatts, If you take the supplemental poverty index (which adjusts for housing, other costs) Texas moves from 5th highest state to 10th highest state in poverty, using that measure.

No need to readjust anything.

I am looking for the data on socio economic changes (moving from one wealth level to another), and it shows that Texas was one of the worst. If you are poor in Texas, you and your kids stay poor in Texas.

"JWatts, If you take the supplemental poverty index (which adjusts for housing, other costs) Texas moves from 5th highest state to 10th highest state in poverty, using that measure.
No need to readjust anything."

The comparison was between NY and Texas. The important point is that Texas moves to 10th place and NY moves to 7th place. I'm certainly not saying that Texas doesn't have poverty issues, but clearly so does NY.

JWatts, The supplemental index does not take into account benefits, it only covers cost of living.

Does Texas or NY have better benefits for the poor?

What is Texas's participation in Obamacare.

JWatts.

As promised here is the economic mobility data by states.

It shows that that Texas has one of the worst economic mobility statistics in the country: if you are poor, you stay poor.

Here is the Pew Data and the Pew Map showing that you have lower upward mobility and higher downward mobility.

http://www.pewtrusts.org/en/multimedia/data-visualizations/2012/economic-mobility-of-the-states

By the way, JW, guess which states have higher upward mobility and less downward mobility: MD, NJ and NY

Bill, I took some time to look at the stats listed on Pew's site.

"It shows that that Texas has one of the worst economic mobility statistics in the country: if you are poor, you stay poor."

From the underlying data table: Texas absolute mobility:15% US average absolute mobility: 17% Southwest average absolute mobility: 15%

JWatts, What your comment indicates is that you want to place Texas with other poor performers to make it look better, but it is still worse, and much worse compared to NY.

Let's go to the data which is listed state by state for poor and well performing states and compare NY to Texas :
http://www.pewtrusts.org/en/multimedia/data-visualizations/2012/economic-mobility-of-the-states

First category: Absolute mobility, defined as average percent growth of residents earnings over a ten year period. NY: 20% growth of average earnings of residents; Texas: 15% NY is above national average; Texas is significantly below the national average, per Pew.

Second category: Relative Upward Mobility, defined as "The percent of residents starting in the bottom half of national earnings distribution who move up 10% or more percentiles over a 10 year period." NY: 38% experienced relative upward mobility; Texas: 31% Texas is significantly above the national average per Pew.

Third category: Relative Downward Mobility, defined as "The percent of residents starting in the bottom half of national earnings distribution who move down 10% or more percentiles over a 10 year period." NY: 24%; Texas 30%. Texas is not significantly different than the national average and NY is significantly better than the national average.

Second category: Texas significantly below the national average per Pew.

Bill, of course there is nothing to suggest that living in Texas reduces your earnings growth.

Cliff, Read the table. Your earnings growth, if you are poor, is significantly less if you are in Texas compared to NY. Pew says it is.

How does an area have less downward mobility than upward mobility, bill? Do you even think before you type?

Easy--if the measure is absolute earnings growth not relative earnings growth. The study uses both types of metrics.

Also you can get this simply if one place tends to be where people start and build careers and the other is where people go after their career is established or simply is in an area where people don't develop skills.

Ranching, agriculture, and much of the work of oil drilling are done in Texas. They likely employ a lot of people who don't build additional skills as they age and more people whose skills could become obsolete or unneeded at various times. That kind of work won't be moving to Manhattan any time soon.

Thank you Jon. I am not deterred by thomas's comments when he doesn't offer any objective comment, just a name call. He could have read the Pew material, but evidently didn't..

It looks like that, but making the poverty wage in Texas is a lot better than making the poverty wage in New York.

See above. If you are poor, you are less likely to move up, and more likely to move down ...see Pew Data above responding to JW.

Of course that is impossible which is why bill exemplifies the type of person whose political views and lack of integrity demand adherence to economic myths that hold that basic supply and demand doesn't hold.

thomas, throughout this post you have not presented on fact, but only did name calling.

You do realize that according to the link you posted, poverty in New York is about the same as Texas? New York is better in some measures of poverty but worse in others.

ZZZ, See reply to JW above, and then go to Pew link.

When are you planning to normalize for type of immigrant bill? I presume never.

Have you ever looked at the rates when geographically adjusted? From your comments, I can tell you are a big fan of controls so you might interested in the following.

"While overall rates are quite close, however, the important effect of the geographic adjustments is that there
are fewer poor in areas of relatively low living costs and more in areas of relatively high living cost. As
one might expect, poverty rates estimated with these geographic adjustments are lower in areas with lower
housing costs, such as the South and the Midwest, and higher in the Northeast and the West"

https://www.census.gov/hhes/povmeas/publications/povthres/sgepaper.pdf

Ryan, the phrase "Supplemental Poverty measure" includes geographic adjustment, so I did cover that in the discussion above and Texas is still at the bottom. Also, look at the Pew mobility data which is discussed above, and Texas is significantly below other states by two of the three measures.

First of all Texas is not at the bottom. Second of all "significantly below" in this case means that if each measure were 1% higher, it would not be significantly different from the national average.

Texas is 5th from the bottom. If you use cost of living it is 10th. Cost of living DOES NOT include benefits for the poor, such as Obamacare, Medicaid, etc.

The 'cost of living' is a problematic attempt to downplay NY's superior economic performance versus Texas (granted it's not a huge difference but nonetheless it is a difference). Since no one is required by law to live in either NY or Texas, on some level the 'cost of living' has to reflect individual preferences and value. A one bedroom apartment costs more in NYC because it is better than a one bedroom apartment in Texas. How about 'cost of non-personal car based transportation'? There I suspect NYC beats Texas as a state and even trumps some of Texas's cities. Is that too a 'cost of living' which we should use to dock Texas's income?

In reality these are just different preferences. If your idea of a home is a place to sleep that is within quick reach your friends and endless novel things to do, then NYC clearly has superior value and Texas does not. If your idea of a home is a personal castle where you can comfortably retreat from the world and induldge in your own enterprises with little intrusion from others, Texas offers superior value.

These different preferences, however, do indeed serve to cancel each other out allowing us to use a common metric like GDP or income to compare and contrast the economic performance of the two areas.

Hmm, but NY restricts housing and Texas does not. So even if less people want to live in NY, lower supply will result in higher prices

Restricting housing does cause prices to increase beyond what they otherwise would but it doesn't void the law of supply and demand. If fewer net people want to live in NYC, prices there will fall despite supply restrictions (and they did in the 70s and 80's).

If NYC opened up supply, you'd see prices come down somewhat as developers start building 80 story apartment skyscrappers but the price of living in NYC will still be higher than Texas.

Gini coefficients for US cities essentially measures the effect of our housing policies. The middle of the income distribution tends to live in the suburbs, while the poor and the extremely wealthy live in the cities. You can't build large apartment complexes in many suburbs and you can't build single family homes in the city. You also can't naively compare Gini of a city to a Gini of a country. You have to e.g. mention things like this -- if you leave them out, it is misleading.

The only reason Gini coefficients can't be used in popular discussion is because of writing like this that essentially ignores the properties of the statistical measure under discussion. Why would a person on the street care about the subadditivity of an entropy measure of inequality? I know what it is and even I don't care!

Also, I thought you economists didn't like treating humans like mindless particles? Why then does an information theory approach to economics get met with so much dismissal?

http://informationtransfereconomics.blogspot.com/2014/08/the-meaning-of-economies-without-humans.html

The more basic question is why everyone is so obsessed with Texas. Or New York. There are 48 other states, most of which are better than either of those two.
(Gauntlet: down.)

Well for starters, they are the 2nd & 3rd most populated states in the U.S.

And they are so different along almost any axis.

We're number one! We're number one!

Signed,

Calfornia

"Have I mentioned that a Gini coefficient isn’t a very good measure of inequality for most purposes? It does not command much loyalty from people who actually work in that area (generalized entropy measures are much more popular)"

Could you point us to some research where using generalized entropy paints a qualitatively different picture than using a gini coefficient? Entropy (average of -log(p)) is mathematically nicer than gini (average of p) but both measures broadly capture the same effect.

It shouldn't be surprising that it's expensive to live in Manhattan. After all, many people want to live there and the island is not that large.

Rich people can live in New York because they can afford the costly housing (and costly just-about-everything-else), as well as pay for services to mitigate many of the inconveniences of dense urban living.

Poor people may find New York City a good place to live as well, as it does offer a great many social services.

It's hardly news that much of the middle class has been squeezed out of New York: it costs a lot to live there (yes, there's even a City income tax on top of an already high state income tax) and those social services don't do much for those who don't qualify for them. So, New York is a city of rich and poor and not so many in-between. Is its income inequality really such a mystery?

The New York subway is a bargain at $2.50/ride; it's a (noisy, dirty) marvel but it can still take a long time to travel to Manhattan from the more distant parts of the City, especially if it's necessary to change trains and walk through some of its endless corridors. Those who can afford it may find car service faster and more convenient than the subway, and will choose to rent a car when traveling outside the City.

For those of middle income and who don't have a break (such as rent controlled or -stabilized housing), Texas must look quite attractive. Although many places closer to New York would as well.

So, maybe Tiffany is a better store than Walmart, but not if you've got $100. to spend and you want to buy as much food as possible with it.

This is a little false, while costs may be higher, quality of life may be worse. I live in Georgia, and when my wife got cancer the incompetent in-network local hospital and my crappy healthcare (with no caps on co-pays-legal in Georgia) nearly killed her and bankrupted us. So I took her up north where there are better doctors and more sophisticated cancer treatments. Cost of living has to REALLY include the entire cost of living. Healthcare laws, costs and actual delivery in the south could kill you...as could the toxic river I live nest to in Savannah, and other items.

+1

Privatize gains (lower healthcare costs) and socialize costs (more people die / impacted by cancer). Model that.

Anecdotes = data?

By the way, Williams link to the Census Bureau does not tqake you to the Census Bureau.
Rather it is to a New York Times article.

He does not look like much of a researcher.

Is the article about the census, at least?

Why are we comparing NYC to all of Texas? Why not NY state? Or NYC to upstate New York or Dallas?

If you have a board you want to measure,

do you measure it with a yardstick, or

With a

Thermometer?

If you are poor, do you care whether you are likely to go up in income over time, or more likely to stay the same or decline.

Go to the PEW data on economic mobility by state, and ask this question:

Is a Gini coefficient a relevant measure, or is an economic mobility measure a better measure,

If you are poor>

Here is the link:

http://www.pewtrusts.org/en/multimedia/data-visualizations/2012/economic-mobility-of-the-states

Texas is a bad state for you if you are poor, and NY is better, in terms of economic mobility.

Is there any evidence whatsoever that living in Texas reduces your earnings growth? I see no evidence of that at your link.

Cliff, your earnings increase significantly more in NY than in Texas. You can read, and you can also look at the graphics, I hope.

There's an intangible cost to moving from NYC to Houston, namely that you lose your social support network. The value of living near your friends and family is *very high*, regardless of where you live.

I moved across the country for my career and it sucked! I lost regular contact with all of my hometown friends and I went from seeing my parents twice a month to seeing them twice a year.

I wouldn't have considered doing it except that my new job in my new state paid 50% more than my old job in my old state. Had the difference been only 20%, I would have turned down the offer immediately without thinking twice.

Now think about what that means on a state-wide level. The fact that NY state is seeing huge outmigration of the native population is a major rejection of that state. We shouldn't expect everyone who is unhappy to leave because leaving isn't a cost free activity.

Between 2000 and 2010 nearly 1.6 million New Yorkers packed up and moved away. These people didn't go somewhere else because it was a little bit better. They went somewhere else because they felt it would be a LOT better.

Did they leave NYC or upstate? New York city is relatively vibrant economically, as opposed to upper NY state which I believe is somewhat moribund. Or at least has been quite slow in the recent past.

http://www.citylab.com/politics/2014/04/2-very-different-migrations-driving-growth-us-cities/8873/

From 2010-2013, NYC lost over 187,000 domestic residents to other areas (about 62K/year). That's a big improvement from the 135K/year exodus during the 2000s but hardly a ringing endorsement of the city.

Once you factor in how awesome living in NYC is supposed to be, the outmigration rate is fairly shocking.

Part of the decline is due to reduced foreign immigration than in the past and to outmigration of baby boomers and retirees to southern climates.

Cooper, let me ask you a question: does rising housing costs in a city tell you anything about demand for living there and the income levels of those willing to pay for those costs.

1. I'm only looking at domestic migrants which generally means American citizens although some green card holders move from state to state.

2. Climate matters, I'll concede that point. However, plenty of blue cities have amazing climates and they aren't seeing strong population growth (case in point, Los Angeles). I also can't imagine that Houston can be described as having a great climate. It's muggy and horribly hot for half the year.

3. Housing prices are influenced by both demand and supply. Regulations and zoning restrictions can artificially boost prices by constricting supply. Places like Houston, Atlanta, Phoenix, etc. have cheap housing because there's no artificial constraint on new supply. They just keep on sprawling out.

Obviously we can't expect Manhattan to densify much but that's the point. Geography makes it expensive, zoning makes it worse. In Houston it's the opposite. Geography makes it affordable and (lack of) zoning keeps it cheap.

NYC is a wonderful place to be rich and talented. Most people aren't rich or talented and never will be. The fact that parts of the city are getting richer and more pleasant doesn't necessarily help the couple earning $52,000/year find a safe place for their kid when two bedroom condos cost well over a million dollars.

Next time Dumb-o-Crats post a map that shows the poverty rate higher in some states than others ask them a simple question...

Do you really believe that a family making $X and living in San Fransisco is not living in poverty while the same sized family making $X - 2 living in Jackson Mississippi is living in poverty?

Comments, on average, better than post. As to post: So what?

There is a whole literature on the value of urban amenities. If I remember correctly, the one with the number one value is warm temperature. And Tiffany/WalMart seems to be another form of the diamond/water paradox.

Any MSA, or smallish university town, will have plenty of ethnic eateries and attractions for the culture vulture. The great equalizer is kids, and the time and budget constraints they impose. No matter the opportunity set of attractions offered by your urban area, it's Frozen at the multiplex followed by McNuggets.

Douglas, you bastard, get out of here with your insanely precise commentary. I will have you know that I had pizza after I took my kids to see Frozen at the multiplex, so there.

I forgot how nice life was before...

Sitting behind a keyboard peering at a screen is pretty much the same everywhere.

I once stayed at my wife's cousins home in NY city. You could afford an apartment like his, here in Gainesville FL living on minimum wage, but of course ny city is a much more exciting place to live.

I spent a winter near Gainsville and was able to attend a cock fight every Friday night.

Jesus. And you snarky bastards just stand around when someone says I comment a lot.

"Have I mentioned that a Gini coefficient isn’t a very good measure of inequality for most purposes?"

By the way, what about diminishing marginal utility of income? It should be true that increasing everyone's income at constant Gini means less real inequality. So I would certainly expect, say, Hong Kong to be more equal than Rwanda. Why don't they account for this?

What's up colleagues, its wonderful piece of writing on the topic of cultureand fully
explained, keep it up all the time.

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