a) get the gross median nominal income for the year (1991 $272)

b) take off tax (23.5% in 1991 leaving $208.08 net median nominal income)

c) use the RBNZ’s calcuator to adjust to 2006 dollars (rather than, you know, guess) – CPI in 1991 735,in 2006 1000. $284 net median real income in 2006 dollars.

d) repeat, graph, laugh at Farrar.

Since 1990 CPI inflation has averaged around 2.5%

Economists do some odd things with growth rates based on the approximation exp(x)-1 ~ x for small x.

So if prices rise 37.5% in 15 years they’ll call that a 2.5% “average” (i.e. 37.5%/15 = 2.5%)

Using the Reserve Bank’s inflation calculator I get:

272.00 $3q1991 = 370.71 $3q2006

So $272 grossed up by 46% = $503

A 46% increase on $272.00 should give you $397.12. Might want to take that calculator in for a service.

This time you’ve forgotten to take tax into account. you’ve got to take that off before applying the CPI.

fish in a barrel mate.

I was being nice to you guys with the above numbers, from the Reserve Bank link. “Since 1990 CPI inflation has averaged around 2.5%”, which over 15 years gives a gross increase of circa 46%. (not the friendly 2% I first used)

So $272 grossed up by 46% = $503 which is more than the unadjusted 2006 figure of $485. We really are going backwards compared to inflation.

If inflation has been hovering around 2% for 15 years the total effect of that 2% over time is circa 35%.

$272 adjusted for inflation over 15 years (35%) is actually $418. Your graph should be point down, which I believe is what DPF has been trying to tell you.

So who is the moron?

$272 adjusted by 15 years of inflation to get $284 shows a total of 4% inflation over 15 years.

Not according to this: http://www.rbnz.govt.nz/keygraphs/Fig1.html

Inflation has been hovering around 2%-4% every year since 2000. Not 4% over 15 years.

Busted. The inflation adjusted graph is sham.

burt you moron

So where is the statement that the first graph (which looks very much like an inflation graph) is adjusted for inflation… It is not.

The second one is adjusted for something, spin perhaps. Perhaps you could publish the percentage used for inflation each year and then I’ll happily debate how you got $284 (as a 1991 median wage adjusted by 15 years of inflation).

Until then I’m happy being a moron for being able to see the unadjusted graph for what it is, a representation of inflation.

first a premise: the object is to find out how much the typical person has in their back pocket and how that changed under naional and labour.

The after tax, inflationed adjusted median income does this better than the after tax inflation adjusted median wage becuase it measures all income rather than just full time wages – so changes in the balance of sources of income distrort Farrar’s figures but not Tane’s. For instance, since 2000 many high income people have shifted earnings that were previously wages into dividends or trusts, that makes am average wage measurement lower but median income is not affected and continues to show the true picture.

Also,just measuring fulltime wages does not tell you anything about if most people have more money in their pockets becuase there is more work around, the median income does.

Basically, Tane’s figures are the full picture, Farrar’s are a portion of Tane’s figures that have selectd for the parttern they seem to show.

(DPF’s previous one only measured ordinary time wages even wose, becuase it missed out changes around penal rates, and it was a mean so subjec outler effect from a few wealthy people getting much mroe wealthy than others, thus giving a false picture of the ordinary person’s income)