Glossary / Key Concepts
KEY CONCEPTS FROM THIS VIDEO:
- Snapshots of the economy are misleading because they compare different people at different points in time.
- Following the same people over time contradicts the standard story of wage stagnation for the poor and middle class.
- People from all parts of the income distribution are getting ahead, but they don’t easily get ahead of the people who started out ahead of them
- The economy isn’t rigged to favor just the rich. The poor and the middle class have made progress. The death of the American dream is greatly exaggerated.
TERMS YOU MAY HAVE HEARD IN THIS VIDEO:
Inflation- Inflation is a continuing increase in the average level of prices in the economy. It is measured by sampling a basket of goods and comparing the prices of the goods in the basket to the prices of those goods in the past. Measuring inflation and the price level at any point in time is complicated by changes in the quality of the goods being sampled for measurement and the changing consumption patterns of consumers.
Stagnation – Stagnation is when there is little or no economic growth.
Quintile – One fifth of a given population. If there are 100 people, each quintile has exactly twenty people. When there are 100 households, a quintile has 20 households but may have more or fewer than a fifth of the overall population because household size varies.
Middle-Quintile Households - Households that earn more than the bottom 40% and less than the top 40%.
Regression Toward the Mean - Regression to the mean is the phenomenon where a variable that is unusually high or low because of randomness or measurement error is likely to be closer to the mean in subsequent measurements.