Well readers, 2020 is finally done. In most respects, it was a terrible year. But it turns out that being stuck in the house is good for a few things … one of them being writing. I churned out 50 posts this year and typed about 150,000 words. Here are the top 5 posts by views:
- What Trait Affects Income the Most?
- Stocks Are Up. Wages Are Down. What Does it Mean?
- Debunking the ‘Productivity-Pay Gap’
- Why Isn’t Modern Monetary Theory Common Knowledge?
- Why America Won’t Be ‘Great’ Again
I feel guilty writing a post without any empirical analysis, so here’s some data to chew on. It turns that on this blog, the distribution of views per post roughly follows a lognormal distribution. Figure 1 tells the story.
What’s a ‘lognormal’ distribution? It’s like the familiar normal distribution — aka the bell curve — with one big difference. With a lognormal distribution, you see a bell curve when you plot the distribution of the logarithm of values. Hence the name — lognormal.
The data in Figure 1 looks like a bell curve. But note that the horizontal scale is logarithmic — each tick mark is a factor of 10. So the data (views per post on Economics from the Top Down) is actually lognormally distributed.
I’ve plotted this data not because it is intrinsically interesting, but because the lognormal distribution is important in economics. When we study income, the lognormal distribution appears everywhere. It’s a key signal of inequality.
On this blog, the top posts got hundreds of times more views than the bottom posts. That’s much like individual income. Top earners receive hundreds of times more money than bottom earners. And here’s an eerie fact. The views per page on this blog have a Gini index of 0.6 — about the same as the Gini index of income inequality in the United States.
What creates this inequality? Many things, obviously. But it turns out that we can generate a lognormal distribution using a very simple process. It’s called the ‘rich get richer’. It happens when the probability of receiving more income is proportional to your existing income. The CEO, who already earns millions, will likely get a bigger raise than the janitor, who earns a pittance. On the internet, something similar holds. The probability of getting more views is proportional to the existing views. Popular pages become more popular. Duds remain duds.
Unless checked, this ‘rich get richer’ process will lead to runaway inequality. Exploring this process, and its counterbalances, is one of the things on my agenda for 2021.
Thanks for reading this year. I have lots of interesting analysis in the works. Stay tuned.
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