Thursday, January 23, 2014

Thursday: Isn't this an obvious thing?

Why don't the rich consider themselves rich.  That link has a whole bunch of bullshit associated with it.  Now, look at this link, which has a simple income percentile graph based on census data.

There's a curve there, and I'm going to be lazy and assume this curve has the form of a logistic function:
p = 10**(1 / (1 + exp(- 3.5 * (log10(x) - 4.2)))) - 1) / 9
See, I didn't just make that all up.
It's not perfect, but it's close enough for the next step.  Assume people hang out with people who are roughly randomly sampled around their own wealth percentile.  Basically, everyone hangs out with people that are "in the same income group" in some fashion.  However big you assume that box is, your income relative to that of the wealthiest person you know is basically the inverse derivative of this curve:
I switched to log10(income) because that simplifies the math.
See?  If you make $1e5 a year, you probably know someone who makes 10**(0.75) = 5.62x more than you.  You make a million?  Oh, I'm sorry, someone you know makes a hundred million, you poor asshole.  

Yes, my initial assumption that people hangout in percentile cohorts is poorly supported.  However, this is probably easiest to support, especially in the highest ranges (5.5 and higher), as we're starting to talk about high paid doctors/lawyers/CEOs.

Also, there's a feature where poor people realize that they're poorer than everyone else they know.  Unfortunately for them, this isn't really incorrect.  They really are really poor.

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