Department of Awful Statistics

More

It's one of the most common errors in discourse today: comparing average tax rates to marginal tax rates.  David Henderson thinks he catches it in a letter to the Wall Street Journal:

Notice that Dr. Palmer computes Obamas' and Bidens' tax rates to the first decimal point but gives his own rate as 28%, which just happens to be the marginal tax rate that a fairly successful doctor with a non-earning wife and a few kids would be paying. [In 2010, the rate for a married couple filing jointly was 28% for taxable incomes up to $171,850.] Is it possible that Dr. Palmer is comparing his marginal rate with the Obamas' and Bidens' average tax rate? I think so. The right comparison is average vs. average or marginal vs. marginal. If he had done that, he would have found that his 28% marginal rate compares with the Obamas' and Bidens' marginal tax rates of 35% and that their 26.6% and 22.8% average tax rates compare with Dr. Palmer's approximately 20% average tax rate.

Marginal thinking is important!  But so is comparing apples to apples, and oranges to oranges.

Jump to comments
Presented by

Megan McArdle is a columnist at Bloomberg View and a former senior editor at The Atlantic. Her new book is The Up Side of Down.

Get Today's Top Stories in Your Inbox (preview)

Why Did I Study Physics?

In this hand-drawn animation, a college graduate explains why she chose her major—and what it taught her about herself.


Elsewhere on the web

Join the Discussion

After you comment, click Post. If you’re not already logged in you will be asked to log in or register. blog comments powered by Disqus

Video

Why Did I Study Physics?

Using hand-drawn cartoons to explain an academic passion

Video

What If Emoji Lived Among Us?

A whimsical ad imagines what life would be like if emoji were real.

Video

Living Alone on a Sailboat

"If you think I'm a dirtbag, then you don't understand the lifestyle."

Video

How Is Social Media Changing Journalism?

How new platforms are transforming radio, TV, print, and digital

Video

The Place Where Silent Movies Sing

How an antique, wind-powered pipe organ brings films to life

Feature

The Future of Iced Coffee

Are artisan businesses like Blue Bottle doomed to fail when they go mainstream?

Writers

Up
Down

More in Business

Just In