Factoids are everywhere. They are those quotable statistics people use to defend their beliefs or undermine another’s. Unfortunately, factoids aren’t always accurate or fair. The really bad ones can even cause us to misidentify what is right versus wrong. So how can you identify the bad ones? It’s actually surprisingly easy to equip yourself with enough basic knowledge to outsmart bad factoids and the agendas behind them.
A Meaningless and Deceitful Factoid
Consider a recent Research Affiliates article as an example. The article included a factoid that was designed to be quoted just like this:
Three US billionaires are now collectively worth more than the 160 million Americans in the bottom half of the wealth distribution. ... few of the bottom 160 million hold any stocks or bonds.
Major financial news outlets like Institutional Investor and Fox Business quoted it. But they shouldn’t have. If you know a couple of basic facts about the United States population, you know it's not worth quoting. It might be a fact, but it's so meaningless that it’s actually deceitful.
All we need to understand that factoid is some basic demographic knowledge. The population of the United States was estimated at 329 million in July 2018. Therefore, it's true that half the United States population would be roughly 160 million people. But populations generally include lots of children. In fact, most of the people "in the bottom half of the wealth distribution" are children or young adults who are no more than a few years into their careers.
Check out the estimated age breakdown of the United States population:
- 0-14 years: 18.62 percent
- 15-24 years: 13.12 percent
- 25-54 years: 39.29 percent
- 55-64 years: 12.94 percent
- 65 years and over: 16.03 percent
There Are Many Factors
People between 0 and 24 years of age account for about 32 percent of the United States population of 320 million. Almost all of them are going to be in the bottom half of the wealth distribution for reasons including diaper rash and puberty. That means they account for about 63 percent of the "bottom half of the wealth distribution." Should it surprise us that some kid fresh out of college does not “hold any stocks or bonds"? Or a kid fresh out of the womb?
Then we must consider people with mental and physical disabilities. They will also tend to be in the bottom half of the wealth distribution because they face greater challenges to building wealth. "About 56.7 million people—19 percent of the population—had a disability" at last count, according to the United States Census Bureau. But there is overlap between the disabled 19 percent and the young 32 percent of the population. If we assume disabilities are evenly distributed in the population, then young people and non-young disabled people account for 45 percent of the population. So we have now accounted for 90 percent of the "160 million Americans in the bottom half of the wealth distribution."
Even if the factoid is true, it's deceitful. Whoever created it was obviously trying to manipulate people.
Next, we must think about other groups who have had limited wealth-building opportunities. What about the 2.2 million people in jail and prison? What about people in their late twenties who pursued PhDs, law degrees, medical residencies, etc., and are just beginning their careers? Now we are close to accounting for 100 percent of the "bottom half of the wealth distribution." But this wealth distribution is not what any sensible person would expect it to be.
Maybe the factoid is true. Maybe Jeff Bezos, Bill Gates, and Warren Buffet have more wealth than all of the infants, children, students, handicapped, prisoners, and postgrads combined. But you don’t need a PhD to figure out that’s not useful knowledge. Even if the factoid is true, it's deceitful. Whoever created it was obviously trying to manipulate people. And we uncovered this deception with nothing but some simple knowledge of the US population.
Next time you encounter an economic factoid, remember that it might be pitting a bunch of newborns against Jeff Bezos, and that hardly seems fair. Thankfully, you can save those babies from certain defeat simply by knowing some basic statistics about your country.