Income Inequality and Divorce Rates
America over the last several decades has grown richer, but the gains have all gone to the wealthy few. Right?
If you follow the debate over allegedly stagnating incomes, you probably know that the statistics used to back up this claim are highly problematic. Russ Roberts expands on this issue and also notes something I had not heard before: how the divorce rate skews the statistics.
Think about it: when a divorce splits a two-income household into two separate single-income households, the economy’s median household income will be lower as a result–even though the individuals in each household may be doing just as well financially. Now consider that not only have we had a skyrocketing divorce rate since the 1960s, but that divorce rate is not evenly distributed among demographic groups: the poorest Americans have by far the highest divorce rates. Result? More and more single-income households at the low end of the income scale, dragging down the economy’s median household income even further.
Another reason to be careful about taking statistics at face value.