Statistical Nonsense of the Month

Trash bin with gold coins
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Walter Krämer, a professor of statistics, found out that the OECD had produced the statistical nonsense of the month: According to a recent study published in May 2015 the topmost 10% of all German employees earn 6.6 times more than the undermost 10%. The authors of the study conclude that income differences in Germany are larger compared to other industrialised nations. Actually, this is absurd.

The above cited factor 6.6 only refers to people having effectively a job. Thus if a part-time employee with low earnings loses his job, inequality is decreasing! Zero earnings are not included in the calculation. If part-time jobs are chosen voluntarily, the analysis of the OECD leads to a wrong comparison of inequality. Furthermore, part-time work is more popular in Germany compared to other countries which apparently perform better as regards inequality.

The comparative studies based on the OECD approach are also misleading. They wrongly claim that the richest ten percent of all Germans have 60% of total net household assets which is more than the OECD average of 50%. But again, the calculation is miserable. The OECD approach does not include the entitlements to pensions which are very important in Germany. If these entitlements would be included in the calculation, the resulting inequality is probably much smaller.

Source: Krämer, Walter, Unstatistik des Monats, in: Die Achse des Guten, www.achgut.com.

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