The Guardian reports this morning that:
The average person will have to save £260,000 over their lifetime to enjoy a basic income in retirement, climbing to £445,000 if they are unable to get on the property ladder, according to a report by a former government pensions minister.
In a gloomy assessment of the outlook for today's millennial generation, Steve Webb said most savers in the government's scheme were likely to accumulate only half the target amounts.
The report comes from insurer Royal London, who clearly have a vested interest in more people saving. The report is also totally wrong.
The more people save the less economic activity there is in the UK. That is for two reasons. The first is that savings take money out of the economy: they are not spent, so that has to be true. And second, because savings do not fund investment (they go into second-hand shares and property in the main, instead) they do not add value to the UK economy. They do instead simply inflate the value of financial assets.
Now let's roll forward thirty years and assume that everyone has saved as required. We will have five things. The first will be a massive pile of financial assets. The second will be an economy that has underperformed. The third will be an economy with too little actual investment because there will have been no demand for its creation. Fourth, we will then in all likelihood be much worse off than those countries that have not saved in this way. But, fifth, and most important there will then be fewer young people (demographic change is happening) and they simply will not have the means to buy that great pile of over-valued financial assets that their older generation will by then own. And sixth, they will be over-valued. The reasons for this I have already explained: markets are institutionally set up in the short term (which is all they care about) to ensure that this is the case.
So how will the younger generation in thirty years react to this request that they buy this pile of second-hand dud financial assets? They'll realise they are being sold a pup and refuse to part with their cash for assets that will deliver little real value to them. And all those savings will disappear in a puff of financial meltdown.
There is good reason for this. Of course it makes sense for an individual to save. I do not dispute it. But as I say time and again on this blog: just because something makes sense for an individual does not mean it makes sense for an economy as a whole: in fact the opposite is often the case. And that is true here. So long as everyone does not save then saving for retirement can work because the assets into which money is saved are not overvalued enough, and the economic effect of saving in the current period is not big enough, for massive economic distortion to result. But is everyone does it then the opposite is true: total economic distortion results: asset bubbles are created whilst current incomes are suppressed and the result is an inevitable economic meltdown when it is appreciated that there will never be a market able to buy the assets that must (in the case of pensions) be sold to provide an income for a person in retirement. And I stress, pension calculations do assume that the capital is consumed and so assets must be sold.
Royal London are, then, talking complete nonsense.
And so too are governments by compelling mass pension saving.
Pensions are always provided by a younger generation being willing to forego part of their income to look after the elderly. That's the only way it works. And that can only happen en masse through a state pension system. The private pension system we have is already tottering because of asset over-valuation. It will collapse if required to do what Steve Webb suggests.
One day we will realise macroeconomic problems cannot be solved with microeconomic solutions. Pensions are a case in point. But right now learning the lesson may prove to be very costly indeed. And insurers will profit on the way. Of that we can be sure.
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You say the more people save the less economic activity there is in the UK.
Isn’t it better people save for their own future, rather than rely on the state to do it?
Are you a saver or do you spend every penny you earn?
Have you read what I wrote? I have answered this
It is not possible for everyone to provide for their own future by saving
Now answer the real question, without your prejudices being brought into play
James Fox says:
“You say the more people save the less economic activity there is in the UK.”
You doubt this, James ?
“Isn’t it better people save for their own future, rather than rely on the state to do it?”
This was the Thatcher era plan. It has worked brilliantly —- for the pensions industry.
Not so well for people buying pensions many of whom have been totally shafted. And the future looks set to only get worse.
If your instinct is to make your own provisions, you’d better be good at it, because you need to stay one step ahead of the sharks.
People save for the future. You now take exception with the global savings industry? I agree there are too many firms out there though. Anyway why don’t you challenge the industry directly and publicly and see what value and justification they see in their activity.
Oh and by the way it’s great to criticise those who choose to save for their future when your sitting on easy street waiting to collect your generous University final salary pension…
Did you read what I wrote?
Why not talk about what I said rather than something you made up?
I did. You want a proper state pension for everyone. Back into the circular argument of Peoples QE to fund it and the consequences of this. You also think all investment is a giant ponzi scheme and the liquidity provided by trading exchanges serves no economic or social purpose. Punchy stuff. I reiterate my point. Why don’t you challenge the savings industry directly and publicly and see what value and justification they see in their activity.
I have just done what you asked.
Up to them if they comment
I strongly suspect they will not.
But if they did they shouldn’t use your assumptions which are nothing to do with what I said this morning because the argument can be sustained without them
You’re not reading anything are you, James? Instead of actually addressing what Richard wrote, you are too busy setting up straw men and being abusive. Typical conservative. Richard, why do you publish these people’s piffle?
Because they whinge and say I censor them when I don’t
I let them make fools of themselves instead
James says:
” You want a proper state pension for everyone. ”
I take it you think that unreasonable ? That everybody should have some security in their third age. Yours is closer than you think.
“Back into the circular argument of Peoples QE to fund it and the consequences of this.”
So what are these ‘consequences’ ? A good state pension, comprehensive health and social care and a gently thriving stable economy supported by accessible and affordable education and a society fit to live in.
How dreadful !
You must live in terror of such an horrendous prospect.
Unfortunately the movement is all in the other direction. The outsourcing of jobs from the public to the private sector replaces pensions that are funded by the state with pensions (little as they will be) funded by savings.
On a bit of a tangent here, but there would be nothing wrong with outsourcing to the private sector if any real expertise was brought to bear on the service/problem at hand. Unfortunately the only “expertise” that these companies often bring is expertise in how to: Pay their employees less and treat them worse. Pay top managers more. Avoid tax. Provide rubbish pensions (thereby contributing to the problem that you outline and putting more people into eventual poverty in retirement). Provide political cover for not actually doing the service required or doing it to a worse standard.
Rant over!
I truly admire your patience, Richard. I hope it doesn’t run out any time soon because I for one have finally given up trying to explain the difference between macro and micro. There seems to be an impenetrable mental block, even with otherwise intelligent people. This doesn’t augur well when extrapolated up to national level. Hence I seriously fear for the direction in which the country is irrevocably heading under the aegis of both major political parties. But, thankfully, there still remains a faint spark of optimism simply because of the wisdom you and the other enlightened socio-economists continue to disseminate in the face of insult, ignorance and a very unlevel media playing field.
Nil illegitimum carborundum, I say
🙂
I agree in principle, (“my house is my pension” some say) but ordinary people not in public sector pension scheme are in a cleft stick. What are they to do? Companies have virtually ended decent pensions, the State pension is a joke. What are they to do while they wait for a decent state pension?
I think you once said you don’t invest in the stock market. Does it have any useful purpose, and what about share issuance?
I use bonds
Sure the results are unspectacular
Sure I have supposedly missed out on returns
But I am likely to get something back
And yes, I do save precisely because I van no other option: I just wish the better options were available and that is why I work for them
“I use bonds..I am likely to get something back”..anyone buying long duration fixed income securities could lose plenty in real terms!!
If I own Shares in 3i (just by way of example) am I likely to get anything back? Of course I am.
You think publishing this item on this blog is challenging the fund management industry? There is no substance, you’ll be dismissed as a crank.
I am 60
You think bonds are so bad for 60 years olds?
Really?
Jason says:
“If I own Shares in 3i (just by way of example) am I likely to get anything back? Of course I am.”
Good Luck, Jason.
You’ll be fine. The board of 3i works tirelessly, and selflessly to secure your future prosperity, I’m sure they do. You are their sole reason for existence. I bet you even get a ‘mench’ in their mission statement. Lucky you.
G Hewitt says:
“… the State pension is a joke. What are they to do while they wait for a decent state pension? ”
I think that is rather the point, G.
We don’t actually have to ‘wait’ for a decent State Pension. (Well except in so far as you have to be old enough to be entitled)
It is deliverable now.
Those people in receipt of miserable state pensions today have been shafted. They worked in good faith and we aren’t delivering. The entire social contract was turned on it’s head by ‘that woman’ at the behest of vested private sector interests who have run off with the spoils. They are sitting on heaps of ‘dead’ money.
Yes, Andy, Yes, but who is going to deliver it now or in the very near future?
Great explanation, thanks. My husband always says “something is only worth what someone else is willing to pay for it”. Smart chap. Mind you he also says “some fool will buy it, some fool already did” so I’m not sure what to make of that!
I remember reading the pension simplication review (Turner? 2004?), there were discussions about the merits of people saving for retirment by investing in property, and the conclusion was that it would follow the course you outline here, (asset bubbles etc, possible two many sellers when it came to sell, though it also mentioned the difficulty about downsizing).
It struck me as funny at the time that there didn’t seem to be as detailed a look at the issues of investing in shares…
BTW: The household savings ratio (ONS – under 6%) is much lower than the last 40 year average. This statistic, might be a misnomer? Or does it imply we are not saving enough compared to previous years?
Spot on re Turner Ken
And I always presume the savings ratio is a residual – and so unreliable
KenM refers to:
“…… (asset bubbles etc, possible two many sellers when it came to sell, though it also mentioned the difficulty about downsizing)….”
Well yes….downsizing. Fine if you can sell your expensive family house and buy a cheap small bungalow.
Now what happened to all those cheap bungalows ? Oops. Everyone wants one so the bungalow market has gone berserk.
What was it Margaret Thatcher was fond of saying…? You can’t buck the market.
If one’s house is one’s pension one had better be prepared to live in a tent.
“Pensions are always provided by a younger generation being willing to forego part of their income to look after the elderly. That’s the only way it works. And that can only happen en masse through a state pension system.”
The state pension is currently about £8k p.a. which is a useful supplement to a private pension but not anything like enough to live on.
If you don’t like private pensions what level of state pension are you proposing and how would you fund it?
Do you know how many people have to live on that sum?
1.1 million according to the DWP: the “…highest level in over two decades” : “…increased by 26 per cent to 1.1 million over the last five years…” and it will doubtless soar.
http://www.independent.co.uk/news/business/news/single-pensioners-relying-solely-state-pension-highest-level-1995-1996-a7686976.html
@ Sam Jones.
If your only source of income is the State Pension then, if you rent, you are entitled to claim both Housing Benefit and full Council Tax support on top of the pension and, as a pensioner, are not subject to the Bedroom Tax.
If you own your own home outright, as many pensioners do, then you have no mortgage to fund. If you still have a mortgage I’m fairly certain you can get help towards that too.
It’s unfair to compare our State Pension with that of other countries which may not add on their equivalent of HB, etc.
However, there are a great many much younger people – working, disabled and unemployed – who do have to manage on under 8 grand a year, including any HB, etc, they may claim.
How does Mr Webb assume/presume that such people can actually afford to pay for a pension in the first place when they can hardly keep their heads above water now, let alone in the future?
I am such a person. I would dearly like an answer to that particular question.
Thanks for your answer
There is no answer to your question
Mr Webb cannot imagine it
One query/quibble. You say “the assets that must (in the case of pensions) be sold to provide an income for a person in retirement.” What about the case of shares (and/or investment trusts) held in a SIPP to yield dividend income? The holdings are not intended to be sold and the actual capital value is not especially relevant since it is the dividend stream that provides the pension income. Is that not at least a bit different?
As you should well know, the number who can have a pension based on income yield alone is tiny
In other words, you entirely and I suspect deliberately miss the point
Or you wealth has blinded you to reality
mr mrs average born after 2000 will never be in a position to save for anything,min wages.no contract hours,bill for further education, for most a complete waste of time! as mrs may said some time ago JAM just about managing she was being optimistic,my guess by the time this generation reach retiring age say eighty there will be no state pension.
mro says:
“…my guess by the time this generation reach retiring age say eighty there will be no state pension….”
The point is….that is not a viable option. There HAS to be a state pension or there will be mass poverty on a scale never previously seen. It will be worse than the Victorian era if only because our population is so much greater.
The private pension industry cannot possibly supply the level of incomes required. (See Richard’s explanation above – the gist of this OP)
Private pensions worked very nicely for a small elite minority. But past performance is no guide to future profits. It is not logically possible for everybody to have elite privilege.
It makes as much sense as Michael Gove’s desire to have all schools be above average.
Some things cannot be done, but comprehensive pension provision is not one of them. That’s doable. But we can’t do it through the private sector. It’s not what the private sector is capable of.
You are right
We have a state pension or in effect we will be culling people
The Tories may be Malthusian but most are not
Yet
Are we at last converging, Richard? I was convinced that NICS are the ideal vehicle for funding pensions – revived SERPS – no leakage to the finance sector, but the earnings-related bit is problematic for socialism. Now I see MMT as the answer, providing a ‘living’ pension for all when they no longer work, with taxes used for purposes other than just revenue raising? No need for pension ‘pots’ at all, but people can save what they want for ‘retirement’.
I see convergeanc3 there…. !
I see convergence there…. !
Which just goes to show, if you say the same thing over and over again (for fifteen years !) it begins to sink in.
I rather hope Carol has the same level of determination when it comes to winning the
case for an LVT. Because it has to happen.
It sure as hell can’t be got over in the fleeting period of an election campaign.
@ Carol Wilcox
Forgive my ignorance but I’m uncertain as to whether you are, or where, in favour of increasing NIC’s towards pensions?
NIC’s are effectively a hypothecated tax. As such any increase will adversely affect low paid/low contract/low hour workers the worst.
For example, most people mistake a penny in the pound increase regarding any form of tax as a 1% increase. They could not be more wrong. A peeny in the pound increase to 13p over 12p on NIC is actually a 8.33% increase, NOT 1%
I well remember every one and their uncle — including most political/economic commentators on TV/newspapers — describing George Osborne’s increase of VAT from 17.5% to 20% as a 2.5% increase. It was in fact a 14.28% increase.
I strongly suspect that if the fabled Joe (or Johanna) Public fully understood this then there would’ve been riots in the streets similar to the Poll Tax riots.
When I tried to explain this to friends/relatives/neighbours none would believe me. Most were highly educated, intelligent people but seem to have little grasp of even the most basic mathematics. Astounding, but true!
It was only when I explained it as if to a 10 year old did they understand, kind of. As predicted they were outraged. Fat lot of good it did, though.
My conversations would go something like this. My apologies in advance for the long-windedness of this.
“You’re confusing a penny in the pound increase with that being the same as 1%”
“But they are.”
“It’s understandable that you should think so, because there are a 100 one percents in a hundred, and a hundred pennies in a pound. But they’re two entirely different things. Governments bank on your confusion… quite literally!”
“You’re confusing me now.”
“You mean like you’re being deliberately confused by governments, any governments? O.K…… When Thatcher’s Government increased VAT from 8% to 15% did it near enough double or increase by 7%, with 7 being the difference between 8 and 15?”
“Both a near 100% increase and a 7% increase?” (They’re uncertain by now)
“How can it be both at the same time? It’s either a near 100% increase or a 7% increase. A 7% increase is nearly 14 times less than a near 100% increase, so which is it?”
My ‘victim’ is looking totally banjaxed by now. I take pity on them and hand them a calculator.
“Here’s a calculator. Now tell me how much is 7% of 8p…. Divide 8 by a 100 to get 1% of 8, then multiply by 7 to get 7% of 8 and what do you get?”
“0.56”
“Now add 0.56 to 8p, and what do you get?”
“8.56p, obviously.”
“Half pennies still existed then, so if Thatcher’s treasury really wanted to increase VAT by approximately 7% they should’ve rounded down that 8.56 to increase VAT to 8.5p in the pound. That percentage increase would actually now be 6.25% and not 7%. But I bet they would’ve increased VAT to 9p in the pound by rounding that 8.56 up and not down. That’s actually a percentage increase of 12.5%. Do you get it now?”
“Kind of.”
“O.K. You understand that VAT near doubled from 8p to 15p. What percentage did it actually increase by?
“I’ve forgotten how to do the calculation.”
“Divide 7 into 8… what do you get? Give me all the digits not just the first 3.”
“1.1428571”
“Quite the mouthful, isn’t it? Now divide that figure, all of it, into a 100… what do you get?”
“87.500003”
“There are so many zero’s there we can call that 87.5. That’s how much VAT increased in percentage terms. Now let’s work backwards. Divide 8 by 100 and multiply by 87.5 and what do you get?
“7 exactly.”
“And what do you get if you add that 7 to the existing 8?”
“15.”
“There’s your new rate of VAT; 15p as opposed to 8p. Do you understand percentages better now?”
I’m not a wizz at maths, but I am better than most. Therefore I can understand the above standing on my head, most cannot understanding it. But political/economic commentators? They’re either no good at their jobs and should be sacked. Or, more likely, they do understand the blarney and are being disingenuous at best, downright deceitful at worst. Either way, they should still be sacked for misleading the general public.
The same applies to a penny in the pound increase on the basic rate of Income Tax of 20p to 21p. That’s actually a 5% increase NOT a 1% increase. I’ve had this argument with 38 Degrees and their campaign to increase Income Tax to 21% to help increase funding to the NHS.
I’ve pointed out that an ACTUAL 5%, not PRETEND 1%, increase will hit low paid tax payers far harder than higher paid tax payers. So just who is it supposed to be helping?
Also hypothecated taxes are rarely actually hypothecated. Just how much Road Tax is actually spent on the roads?
The same applies to NIC increases. A 1p increase from 12p to 13p is actually an increase of 8.33%
Despite filling in 38 Degrees survey in what I suspect was a negative manner by their reckoning they STILL asked me via email to represent them meeting my MP over NHS funding.
I strongly suspect it was a computer generated email, which is why I received such a request in the first place. Be interesting to see if they still want me to represent them when they read my replies to their request? Will I receive a phone call from them?I suspect not!
If even 38 Degrees – and I have a lot of time for them having signed god alone knows how many petitions and a lot of foot slogging collecting signatures for their I Love The NHS campaign – can get this simple maths/concept wrong then I despair.
Most people are clueless at maths
Sandra Harvey says:
In effect, “it’s amazing how bad a lot of, apparently quite intelligent, people are at maths.”
I have some sympathy, but it’s limited, and it’s particularly pertinent to one of the essential hazards of stock market investment.
If your portfolio takes a fifty per cent hit in a crash, you don’t have to regrow 50% to recover your position you have to make 100% growth to get back where you were.
That’s a double whammy because all the time your portfolio is recovering it’s failing to grow at the rate you were expecting, because it has lost so much ground.
A 50% crash is exceptional, but a 20% crash is not. And a 20% fall requires a 25% growth to recover.
Devious things percentages.
As some wiseacre said. “if you think education is expensive, try costing ignorance.’
How many socialists working in the Public sector (or working in universities) have a problem with the earnings bit in their final salary pensions?
Do you think all who work for the public sector are socialists?
Do you know what a socialist is?
Have you ever met either?
Your comment suggests not
James –
“How many socialists working in the Public sector (or working in universities) have a problem with the earnings bit in their final salary pensions?”
If I may offer an answer, because I work in the public sector and I consider myself a Socialist. I have absolutely no problem with the “earnings bit” in my final salary pension scheme. Of course, I’m one of the lucky ones, because the public sector no longer offers final salary pensions schemes (Classic, Premium and Premium+ were all shut down in 2015 and replaced by Alpha, a defined benefit scheme). A portion of my pension will be based on my final salary, but not all of it. Recent public sector employees won’t have that.
As for the Socialism aspect, I think you may be confusing Socialism with the perceived definition of Communism, i.e. everyone receiving the same reward no matter what they do. That’s utter nonsense, of course… not only is it unfair and undesirable, it’s unworkable.
What I mean by socialism – and this goes to the heart of my decision to stay in public service when I could double my income in the private sector – is that I believe that life should be fair and compassionate to all. Nothing more or less than that. There is enough food, there could be enough housing, there are resources enough in this world to make sure that everybody has enough to eat, a warm and comfortable place to sleep, a change of clothes and access to Strictly Come Dancing (other forms of entertainment are available – but you get my meaning). So…
I believe all children, regardless of race, religion, culture or socio-economic background should have the same chances in life. The same options of education, the same level of healthcare provision and the same love, nurturing and help through into young adulthood. No child should be cold or hungry or homeless. Once everyone has had the same start in life, then let your competition in the Great Game of Adulthood begin.
I believe that all adults, regardless of how they fill their days, are deserving of respect. There is no reasons for society to look down upon or look up to any single person or group of people. We will do that individually – we all harbour our prejudices and favours – but society (which oftentimes will be synonymous with “The State”, reflected through “The Media”) should regard all citizens with the same level of respect – and that level should be set high. As adults, some will do better in The Great Game than others, whether that means making more money or advancing in their chosen field or being parents or whatever it is that they choose to do. That’s just the way of things. However well or otherwise an adult does (by whatever metric is most appropriate), should always run second to the respect that society at large shows them. And at no point need anyone be hungry or cold or homeless.
And finally, we should honour our elders and let them live out their days in as much peace and happiness as they wish. Our elderly have done their bit for the species and deserve their piece of the pie. Call me selfish cos I dearly hope to be old one day… but I wish the same for you, so I suppose it’s OK.
So, I am intensely relaxed about the amount people can earn whilst working, yet I remain a committed socialist. I don’t think a part-time shoe-shine boy should earn as much as a Consultant Oncologist… and neither would the shoe shine boy, if he was honest. It’s all part of The Great Game. But whether you win or lose at the game, there should always be respect, compassion and a basic standard of living below which none should fall.
That’s my view of Socialism. Please tell me what’s so offensive about it.
Many thanks
I like such statements
May I share it as a blog post?
Richard –
Of course, if you’d like.
You talk with hypocrisy. You criticise those who save for the future via pensions then dodge any mention of final salary pensions. They are incredibly valuable as evidenced by University lecturers recent strike action – all about people looking after their own interests. People with private pensions are trying to take care of themselves also and enjoy life beyond work, what is wrong with that?
Hypocrisy? I have been in an employer scheme for a couple of years. My pension, such as it is, is what I have created.
As usual you write twaddle.
And you also have not read what I said: I have acknowledged that some people will save. What I am talking about is the economic consequence of what may seem rational.
The crassness of your commentary is hard to overstate
Fair comment, although it would be nice if those surplus countries with excess savings (much of which floods into developed markets like the UK) were encouraged to change course…
Geerarkay – a quality post. Nothing offensive about what you say I am in agreement. The “socialist & earnings” bit I just picked up from carols post.
I do disagree with Richards’s hostility towards savings and pensions. The vast majority, myself included, save for the future via a pension and I believe that is to be applauded not criticised and I believe some of his opinions on investment and markets can be challenged. That’s all. Anyone I enjoyed reading what you said as I am sure did many others.
For heaven’s sake: are you literate?
I said saving makes sense for an individual
I also said it creates a macroeconomic problem
Can’t you tell the difference?
If you can’t your opinion really is not worth reading
Now engage with what I said or stop wasting my time
People on mass deciding not to try and provide for themselves via pension and instead rely on the state – would that not create a macroeconomic problem?
No: we’d have a boom
Savings crush economies
The world has a glut of them
The “savings glut” you say is at a micro level the individual attempting to level out earning power and spending over a lifetime. You argue the alternative is to spend all you earn when you earn it then struggle in later life or to force people to work till they drop.
I give up: you are clearly functionally and economically illiterate
And argue only with straw men
I will be deleting your future comments
I never said that I was suggesting people stop saving
I was aging that reliance on this alone would cause a macroeconomic crisis
On the other hand, a state solution would not if (and this is a big if) appropriate policies of state investment were put in place to provide the intergenerational transfer of capital that is necessary.
But you have not or cannot read that and a s a reuslt continue to write nonsense
The deletion policy will now come into action.
@ Andy Crow
I’ve never bought a share in my life, let alone had a share portfolio. However, as an ex-artist I used to have a portfolio of drawings/paintings. Exactly the same scenario you described with share portfolios applies to artists and their portfolios via galleries.
I lost count of the amount of artists who couldn’t understand how commissions worked when selling work through a gallery. If they wanted to receive £100 for a painting, and the gallery charged a standard 33% commission the artist would usually put a price of £133 on their work. They were inevitably both gutted and pissed off when they only got £88.66 when it sold instead of the expected 100 quid.
I would explain till I was blue in the face that if you want to receive two thirds of the selling price of your work, with the gallery retaining one third, then whatever price the artist wanted to receive they would have to add 50% and NOT one third.
Some got it, most didn’t.
I’ve always though the Royal Academy during their summer exhibition must have made a killing due to this misunderstanding. A) Art work sells to the general public more quickly and more often if its asking price is more cheap than it otherwise would be if the RA’s commission of 25% was correctly calculated by all artists. B) The RA forks out less to the artist/s than the artist/s expect assuming their work sells, which it’s more likely to as it was cheaper as described in A).
Don’t even get me going on the misuse of the term average. That drives me nuts. If you think about it a true average in real life is rarer than hen’s teeth or rocking horse manure because an average can be so easily skewed, giving entirely the wrong impression.
Yet government officals/political commentators/economists will use the term average willy-nilly giving totally the wrong picture to the general public.
My bête noir is ‘average wages.’ This mythical average wage currently stands at about £27,000 the last I read. It implies that most people are on or near this figure for wages. No they’re not!!!
According to the ONS (admittedly 2013-14 figures so my comparison is a bit skewed itself) just over half the working population is on wages of £18,000 or less. However, given that wage increases have been either frozen or very little for most people, even assuming that figure is now £20,000 it’s still a hell of a lot less than £27,000.
Surely the mean or median figure should be used as an economic indicator not the average? But then the figures wouldn’t look so good, would they?
Confession time now: For the life of me I can never remember the difference between mean and median. I know one means the same as average, and the other means the most common of. Too many means there!
If anyone can come up with a simple trick for remembering the difference between the two, I’d be most grateful.
Something along the lines of that trick for remembering how the clocks change: Spring forward, fall backwards.
Note to self: I really must get around to learning how to create folders for my bookmarks; I’ve got over 2,000 of them! No wonder I couldn’t find the ONS link.
Note to Mr Murphy: Your blog is the equivalent of blog crack cocaine. You’ve turned me into addict!
“Note to Mr Murphy: Your blog is the equivalent of blog crack cocaine. You’ve turned me into addict!”
Me too, Sandra. 🙂
I’m not going to try and explain mean and median, because last time I did so I discovered I was wrong (at least in the detail) !
[…] name Geearkay made such a comment yesterday. In response to a suggestion that socialism is a threat he or she said this, which I felt worth making the basis for broader […]
You rely on sensationalised soundbites that invariably get a round of applause from most of your posters but you always (except when talking about tax) lack substance. When challenged by those who disagree or seek more clarity who revert to hostility. This might explain the shallow platform you adopt to express your views and why your views (tax aside) carry no real authority.
If you were so sure that was true you would not turn up here to comment