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The Long Right Tail

Reading more about these differences of opinion as to who counts as “rich” it occurs to me that talking about the income distribution in terms of percentiles may not be the most enlightening way to think about this. according to the census the median household earns about $60,000 whereas a household earning $133,000 would be in the ninetieth percentile and $1.6 million would put you in the 99.9th percentile. Expressed in percentiles, the $133,000 household is closer to the $1.6 million household than it is to the $60,000 household — 90 is closer to 99.9 than it is to 50. But in another sense, of course, 133,000 minus 60,000 is 73,000 whereas 1,600,000 minus 133,000 is 1,467,000.

The income distribution, in other words, has a long right tail. That means that folks up in very high percentiles — like the ninetieth — in many ways really do have more in common financially with folks near the middle of the income distribution than they do with folks just a little further up the scale than they are.

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