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The idea that percentiles are not a reasonable way to graph incomes is goofy, of course it is reasonable. Many economic statistics are published this way. If you don't like percentiles and think income amounts are the only legitimate way to graph , there are a couple of standard ways to do this, either linear (equal sized bins) or logarithmic. It would be interesting to see all three ways of graphing, maybe David in Cal can do this for us, since he criticizes Brendan for commenting on the Journal's bins without giving the right bins. As for the Journal's bins, there is nothing normal about it. The ratios of the sizes of adjacent bins are 1, 1, 1, 1, 1, 2, 1, 2.5, 1, 4, 3, 1.6, 1, 1, 6, 1.6, infinity. I don't see an obvious rationale for these bin sizes. Possibly they want median income to be in the middle bin. If you do that with a straight linear or logarithmic graph, the top bin looks too big. Thus the stretching of the bins to the right of median income. Exercise: In a graph with income on a logarthmic scale with median income in the middle bin, how much bigger than any other bin would the top bin be?
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May 16, 2011