Income Distribution Across States

At the request of Matt Yglesias, I have produced 2012 figures for income levels at various points of the income distribution across the 50 states.

Click here for the downloadable spreadsheet.

 

The details of these figures are as follows.

  • Family Unit. For purpose of allocating income across family groups, I used the Supplemental Poverty Measure's family unit. The SPM unit defines a family as "all related individuals who live at the same address, including any coresident unrelated children who are cared for by the family (such as foster children) and any cohabitors and their relatives."
     
  • Income Concept. For purposes of defining each family's income, I use a disposable income measure that is similar to the Supplemental Poverty Measure's income concept. Under this concept, a family's income is: market income + cash transfer income + cash equivalent value of non-cash transfer income - taxes paid - child support paid. For a complete run down of what this all includes, click here to see the income concept defined in my poverty calculator.
     
  • Per Capita Income. In the spreadsheet above, I provide figures using two income equivalization methods. The per capita income equivalization method takes all of a family's income (defined by the Income Concept and Family Unit) and divides it by the number of persons in that family. A family of 4 with an income of $20,000 would thus have a per capita income of $5,000.
     
  • Equivalized Income. The second equivalization method is just called "equivalized income." Under this method, I take all of a family's income (defined by the Income Concept and Family Unit) and divide it by the square root of the number of persons in that family. A family of 4 with an income of $20,000 would thus have an equivalized income of $10,000.
     
  • Ventiles. I provide incomes for each state at every fifth percentile (5, 10, 15, 20, 25, and so on). Income at the 5th percentile refers to the income at which 5% of incomes are lower and 95% of incomes are higher. Income at the 10th percentile refers to the income at which 10% of incomes are lower and 90% of incomes are higher. And so on.

If you download the spreadsheet above, you'll see seven separate sheets contained in it (look at the tabs on the bottom). Those seven sheets are as follows:

  • Per Capita. Using the per capita method described above, this sheet simply lists the dollar amount of per capita income at each ventile in each state and for the US as a whole. The dollars are 2012 dollars.
     
  • Per Capita Rank. This sheet ranks each state and the US as a whole from 1 to 51 based on how much disposable income exists at each ventile. Beside each state, I've also included in parentheses a percentage. This percentage refers to how much higher or lower the income is at that ventile in that state than the income for the US overall at that ventile.
     
  • Per Capita Ratios. This sheet lists three commonly-used inequality ratios for each state and the US as a whole. The first ratio is P90/P10 and it is the ratio of income at the 90th percentile to income at the 10th percentile. The second ratio is P90/P50 and it is the ratio of income at the 90th percentile to income at the 50th percentile. The third ratio is P50/P10 and it is the ratio of income at the 50th percentile to income at the 10th percentile.
     
  • Equivalized. Same as the Per Capita sheet, but with the equivalized income method described above.
     
  • Equivalized Rank. Same as the Per Capita Rank sheet, but with the equivalized incomes.
     
  • Equivalized Ratios. Same as the Per Capita Ratios sheet, but with the equivalized incomes.
     
  • Equivalized Family of Three. This spreadsheet takes the equivalized incomes at each ventile of each state as reflected in the Equivalized sheet and adjusts it for a family of three. This involves multiplying the equivalized income at that ventile by the square root of 3. Adjusting equivalized incomes to a family of three can make the figures more relatable to normal audiences. You can also adjust the incomes to any other family size by multiplying the figures in the Equivalized sheet by the square root of the family size you prefer.

Because the US has a fully integrated economy where the federal government establishes the primary share of the country's economic institutions and fiscal policy, I am wary of concluding too much from these figures. Also, given the enormous number of states, I have a hard time conjuring up helpful graphical representations of any of this (though maybe others will have ideas).

To get a good sense of what the data shows, I'd recommend perusing the spreadsheet above all else. Short of that, here are some tidbits I'd pull out:

  1. Mississippi is quite poor. In both equivalized and per capita income, Mississippi is in last or second-to-last place for every ventile except the 5th percentile in equivalized income where it is in third-to-last place.
     
  2. New Hampshire outperforms everywhere except the top. In both equivalized and per capita income, New Hampshire is ranked number one at every ventile until you get to the 70th or 75th percentile, at which point it gives way to New Jersey and Connecticut. Even at the higher percentiles, however, New Hampshire remains in the top 5 or 6 states.
     
  3. Vermont is the most equal. In both equivalized and per capita income, Vermont has the lowest P90/P10 ratio, the second-to-lowest P90/P50 ratio (behind Minnesota), and the lowest P50/P10 ratio.
     
  4. New Mexico is the least equal? In equivalized income, New Mexico has the highest P90/P10 ratio, the highest P90/P50 ratio, and the second-to-highest P50/P10 ratio (behind Arkansas). In per capita income, New Mexico has the highest P90/P10 ratio, the highest P90/P50 ratio, and the fourth-to-highest P50/P10 ratio (behind Mississippi, Louisiana, and Oklahoma in that order).

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