The Access Economy: Why the Normal Distribution Is Vanishing (2015)

https://alexdanco.com/2015/12/17/taylor-swift-ios-and-the-access-economy-why-the-normal-distribution-is-vanishing/

by ranvir • 7 years ago

222 151 7 years ago

polote• 7 years ago

Chances are good that if you’re in the market for a smartphone, you fall into one of two very clear cut categories. Either: a. you’ve decided that your new phone is a very important item in your life, so you’re going to buy the nicest phone available at whatever price. (Usually this means an iPhone, although some flagship Android phones qualify for this category.) Or, b. you’ve decided that just about every phone out there is ‘good enough’ and is more than adequate for your needs, so you’ll go with whatever one costs $0 with your existing wireless contract.

He doesn't provide any figure, he just says things and consider them to be true.

bko2• 7 years ago

I don't think it is true. Just a cursory google search suggests that the market, at least globally, is a lot flatter and is likely flattening. Not everyone has an iPhone or Samsung. [0]

Similarly, those large cities he lists (LA, New York and San Fran) have relatively low population growth, at 0.67%, 0.25% and 1% respectively [1]. Large cities like Phoenix, and Austin have around 2% growth.

This makes more sense to me. As these cities become crowded and expensive, people will naturally look for a better deal.

These types of articles are just lazy. The author doesn't even seem to bother doing basic research.

[0] http://zindagi.online/2018/12/03/gartner-global-smartphone-s...

[1] http://worldpopulationreview.com/us-cities/

blfr2• 7 years ago

Large cities seem to also depress fertility.

https://twitter.com/Cicerone973/status/1124426697972092928

Barrin92• 7 years ago

Yes, it's just a wrong intuition sold as fact. Millenials have increasingly started to buy larger cars and moved from the big cities to the sunbelt and the suburbs.

(https://www.theatlantic.com/business/archive/2017/04/why-is-...)

The idea that everyone will be riding around in shared cars and live in the LA megalopolis is a tech industry fantasy.

coldtea18• 7 years ago

I don't think it is true. Just a cursory google search suggests that the market, at least globally, is a lot flatter and is likely flattening. Not everyone has an iPhone or Samsung.

He doesn't say that "everyone has an iPhone or Samsung". Quite the opposite. That there's a large flat base of sub-300 phones, and a 10% (or more, depending on country) of people with high end (say over $800 phones), and not much in between.

jdavis703• 7 years ago

You’re looking at 1% population growth, but much higher real estate growth costs. Looking at real estate demand is probably a better way to measure demand in cities since it’s so hard to build new homes these days.

mikeash• 7 years ago

Not to mention that a person who’s cost conscious about their phone won’t have a contract that included “free” upgrades anyway.

hn_throwaway_99• 7 years ago

And, indeed, Apple's pricing strategy (selling old phones on discount, having multiple versions of the flagship, e.g. "Max" and other) suggests they're trying to hit a broad section of the demand curve.

username2232• 7 years ago

That's not even vaguely true. I don't get the supposed dichotomy between giant $1000+ slabs of glass and plastic junk.

A few years ago, a friend gave me his old mid-level Samsung phone for free. It was a piece of garbage, and I hated using it, but I put up with it until it died. Afterwards, I looked around for something decent that wasn't too expensive, and settled on a refurbished iPhone SE. It cost a couple hundred dollars, and still works just fine. It doesn't have all of the latest bells and whistles, but it's good enough, and actually fits in my pocket.

wisty• 7 years ago

IIRC it is true, but it's a quirk of the phone market. People either go for the the flagship or for an economy phone, but it's a weird quirk of the mobile market (since most people assume that the cheapest phones are basically as good as midrange phones, or that they're better off with a cheaper phone and more frequent upgrades, so there's no middle).

Cars are different. Not everyone buys a Porsche or a Kia.

ip263• 7 years ago

The vanishing middle is actually happening in many, many markets IMO. You can either get cheap plastic junk or overpriced glam. MacBook Pro or Chromebook. The high quality, no frills, moderate price product- it's gone from most markets.

Cars are perhaps one of the few exceptions, maybe due to sheer price setting hard limits on the high end and basic safety setting limits on the low end.

jdhn2• 7 years ago

His paragraph about jobs is spot on. I've seen this in my own workplace on a team that is 75% contractors and 25% full time employees. Contractors are seen as completely replaceable, and if one leaves they'll be replaced with another one after a quick round of interviews. However, if a full time employee leaves, the process to replace them seems to take much longer as it appears that those doing the hiring are looking for The Superstar. I'm not sure how to fix this, or if it's even possible to fix.

xt00• 7 years ago

I think people could argue that even years ago many workplaces have been sort of bifurcated between people that would be "first to fire" and those that were "integral", but these days it appears that its become more institutionalized by the use of the contractor and full time employee classes -- I would say generally not a great trend.. seems better to at least allow the illusion to people that are initially considered as less important to have a chance to become more important within the company..

newshorts2• 7 years ago

You’re touching on something that may affect these companies medium/long term.

The fact that there’s a class divide among workers now naturally selects out many workers that otherwise might be incentivized to create more wealth for the company. This could have long term consequences in industries that formerly relied on innovation.

sokoloff• 7 years ago

What's to fix? Contractors don't have the same shadow of having to pay out severance or even the emotional investment of having to fire an employee.

It seems perfectly natural that management would be much more selective for permanent employee hires than for contractors.

unreal373• 7 years ago

The fix is to always hire contractors, let the bad ones go, and convert the good ones to full time if you can.

Hermitian9092• 7 years ago

In any industry where good employees are in high demand (like tech) this strategy has the unfortunate effect of filtering out most individuals who are both good employees and experienced. None of the really good software engineers I know would accept this arrangement unless the contracting wages were a ridiculous multiplier of their normal salary.

jdhn2• 7 years ago

This is what should happen, but doesn't. It could be that this is specific to my company, but it's quite rare that this actually happens. There are people who have been contractors for 10+ years.

tonyedgecombe• 7 years ago

When I was contracting I would always get an offer towards the end of my contracts. I never accepted as I enjoyed the clearer supplier/customer relationship you get with contracting. Most of my peers refused because it rarely made financial sense.

SmooL• 7 years ago

"-Normal distributions come from multifactorial situations, where many variables matter. -In a world governed by scarcity, our decisions and preferences tend to be multifactorial in nature. -In a world governed by abundance, on the other hand, our decisions are no longer multifactorial. They tend to be dominated by one factor above all others: either X matters to you, or it doesn’t."

I'm more curious as to _why_ our decisions become dominated by one factor as we approach abundance. It almost seems counter-intuitive: in a world of abundance, wouldn't there be more things we could afford to care about? In a world of scarcity, wouldn't your decision be based mostly by just "does it do what I want it to do"?

Maybe we're just lazy. Maybe it's the other way around: in a world of abundance, we can _afford_ to be _lazy_ and not care about nearly as much, and instead focus on singular values.

In either case, I'm not convinced that decision distribution is a function of scarcity/abundance, but rather some other factor, of which scarcity/abundance contributes to.

blfr2• 7 years ago

In a world of scarcity, wouldn't your decision be based mostly by just "does it do what I want it to do"?

Yes but also "can I afford it?", "is it available?", "will it be shipped on time and to my address", etc. When you reach real abundance and everything is at your fingertips, the only factor that matters is whether you want it.

bluetomcat• 7 years ago

I'm more curious as to _why_ our decisions become dominated by one factor as we approach abundance.

I would speculate that it comes down to the availability of too many different "classes" of products and services, which are often self-exclusive. There is only so much time in a day to consume a limited amount of these products and services. People's time and attention span is the limiting factor.

Let's say that you are in the market for entertaining yourself in some way. You can entertain yourself by riding on a rollercoaster, by watching movies, by driving a sportscar, by hiking, by doing photography. There is too much choice, and you eventually pick only one or two of these activities and they eventually become your "favourites". You become addicted, you prefer buying only high-end, specialised equipment, and you skew the market of that product accordingly.

cfarm2• 7 years ago

In a world of abundance where you can (by definition) do whatever you want, you will need to prioritize the things that you want to do vs not. There is simply not enough time to do everything so there is less "weighing" of decisions.

geitir• 7 years ago

I would predict things tend toward the bi distribution the article talks about during market lulls and that competition rather than abundance creates the gaussian distribution. In the example of smartphones given, there hasn't been the same rapid progress as there was between each generation even a few years ago. So most middle of the road smartphones are all fairly comparable. That said, if someone wanted to take the energy and time to find the best available of this mid tier I'm sure they could, it's just the majority seeking the middle of the road find the average of this tier good enough. If any revolutionary comes out again soon I would guess there would be an immediate gaussian distribution again

pjc504• 7 years ago

Tournament wages theory: https://en.wikipedia.org/wiki/Tournament_theory

This seems to happen whenever there's (a) direct competition (b) the value provided by the winner is very scalable (media, sports, software) and (c) most importantly, it can't be substituted by splitting the job among more people.

So footballers follow this model because you can only have 11 people on the pitch - there's no amount of low-wage non-first-worlders you can replace Ronaldo with. Megastars follow this model; if you want to see Taylor Swift, that doesn't substitute cleanly with Ariana Grande or your local bar band.

And software engineers follow this to some extent because splitting problems up is in itself the difficult bit.

onlyrealcuzzo• 7 years ago

Software engineers follow for the same reason as footballers or doctors.

In football, there's only a market for the best. Nobody likes a loser.

It's the same in health. There's no market for mediocre or bad doctors.

Similarly, there's not really a market for software that doesn't work. Writing novel software that solves real problems isn't yet trivial. So there's not a huge market for bad software engineers. And there isn't yet a big enough supply of good ones to meet demand.

See why Google doesn't just lower their bar to hire more candidates. It wouldn't do them any good.

pjc504• 7 years ago

Few markets have a market for "bad" employees, surely? What matters in the tournament situation is that the number #2 employee isn't as good as the #1 employee, regardless of what absolute quality level we're talking about.

BurningFrog4• 7 years ago

This is quite confused reasoning. Sports are by definition zero sum games. There can only be one world champion etc.

No such mechanism exist for doctors or software engineers. They get rewarded for the value they create, and there can in principle be any number of them, as long as they create additional value.

newshorts2• 7 years ago

Google does hire lower bar candidates, they are called vendor contractors.

throwawaymath• 7 years ago

Similarly, there's not really a market for software that doesn't work.

Not sure you and I are in the same market, friend.

Engineers and doctors are highly commoditized compared to professional athletes and celebrity entertainers. We produce a fundamentally fungible good.

If you can pay the market rate, you can find a replacement engineer to work your software. If Taylor Swift's concert is sold out, you cannot see Taylor Swift. If Aaron Rodgers dies, there are how many quarterbacks in the world capable of replacing him?

These are categorically different things with categorically different market dynamics. Approximately no software engineers (or doctors) have a personal brand, nor an objectively superior skillset.

arsenico• 7 years ago

In football, there's only a market for the best. Nobody likes a loser.

Would totally disagree - given the number of football competitions [1], it is obvious that there's a market for anybody who wants to and can kick ball.

Same for software engineers - there are 23 millions of those in 2018 [2] and abundance of body shops, government jobs ("good enough for government work") and various engineering support functions says the opposite of what you're saying.

[1] https://en.wikipedia.org/wiki/List_of_association_football_c...

[2] https://evansdata.com/reports/viewRelease.php?reportID=9

username2232• 7 years ago

Maybe that works for Levandowski-level celebrity engineers. There are, maybe, a few thousand pro football players in the world, and a few hundred on the top teams. (For comparison, there are 450 players in the NBA.) The tech behemoths each have tens of thousands of employees, so most engineers are a commodity.

nerdponx• 7 years ago

You can't typically replace a 150k/yr engineer with two 75k/yr engineers.

JackFr• 7 years ago

This is pretty muddled thinking. He talks about categorical variables and then points out that they are not normally distributed. Which doesn’t make sense. (It almost could, but he skips an important step.)

Apart from that it's mostly handwaving and opinion with no actual data. When you don't use data it's unsurprising that your personal experience matches your hypothesis.

nkozyra• 7 years ago

Yeah, I felt like there is perpetually a point the author is about to get but then just moves on to the next thought. Kind of frustrating to read, honestly.

coldtea18• 7 years ago

He talks about categorical variables and then points out that they are not normally distributed.

Smartphone prices and city populations are not categorical variables...

ErikVandeWater• 7 years ago

Yes, he just chose a satisfactory cutoff for whatever counts as a "true" flagship. Some people would say only this generation iPhone. Some would say only this generation iPhone + Pixel + Galaxy. Some would say this generation, and the previous generation of iPhone + Pixel + Galaxy.

And even then, we're ignoring features like internal storage capacity for each phone.

Even if you are making $10 million a year, you split that between your yacht, your car, your mansion, and jewelry for the wifey.

You aren't going to have the biggest mega-yacht and no jewelry for the wifey, so there will be a tapering at the higher end of the demand curve for yachts for people making $10 million a year.

febeling• 7 years ago

True. Still an interesting idea, even if it needs verification (or falsification).

in_cahoots2• 7 years ago

The author almost stumbles on the answer to his question when he shows the height distribution. It’s bimodal, because men and women have different average heights. Similarly, flagship and lower-tier phone buyers will display distributions in what they’re willing to pay. If you combine two separate normal distributions you can always make a claim that a single distribution is no longer normal. But that doesn’t make it an interesting insight on its face.

mrob2• 7 years ago

It's not similar to height distribution. At the population statistics level, human height is bimodal because humans either have a Y chromosome or they don't. What is the equivalent binary variable for the phone market?

coldtea18• 7 years ago

Obviously income. Are you in the upper 20% that does great (or still fine), or in the 80% that's increasingly scrapping by?

in_cahoots2• 7 years ago

I suspect there are (at least) two populations of phone buyers: those who see it as a cool gadget with the latest technology, and those who just want a device to browse the web, take some pictures, and play some games. The former upgrade every year or two to the best phone they can afford; the latter are happy paying a few hundred bucks or less when their old phone breaks or no longer holds a charge.

wetpaws• 7 years ago

Caring about phones as status symbols vs not really. (Which is, again, sort of the point of the article)

opportune• 7 years ago

This is a dumb article. Wow, the author rediscovered a beta distribution without knowing what a beta distribution is.

JMTQp8lwXL2• 7 years ago

Not everyone is an expert in statistics. But there were many other interesting points beyond the statistical in the article, like the implication of this phenomena on our economy.

JMTQp8lwXL2• 7 years ago

If this author's conjectures are correct (and I think there's some truth to them), my honest response is not care about anything. Because I'm not willing to be price gouged. If I know that something priced at the top end for the sake of it, I won't pay. I don't need to care about Taylor Swift that much. I don't need the latest smartphone.

This doesn't work with everything; for example, I could need access to health care. But for the vast majority of non life-or-death purchases, I'll opt-out.

I don't think I agree with the rationale: the bifurcation is more likely based in economics. Niche appeal at 10x the cost might be more profitable that reasonably priced, mass appeal products. E.g., when it comes to things like Taylor Swift tickets. I'm unwilling to spend a few hundred dollars to see her. These live performances are for people who are.

coldtea18• 7 years ago

We can see, too, that these bifurcations are driven by a shift from a world of scarcity to a world of abundance.

To me all these bifurcations seem to me to stem from a change of a world of more evenly distributed wealth (for working, lower middle, and middle class) and one with wild inequality.

It's a world where a 10-20% can afford the "whatever" (e.g. best phone, live in NY/Bay area, university degree, etc) and the rest have to scrap by and increasingly pinch pennies (while still doing some desperate wealth-signalling purchases, like poor urban blacks that buy $200 sneakers to feel like they have something nice and can participate in the kind of society they see in ads).

Back in the 50s and up to the 80s a signle-income middle class household could still send a kid to college, buy a house, and so on. And living in NY or the Bay are was still very affordable (to the point that both areas had large artistic / bohemian communities living there, and not of the latte sipping urban wealth variety, but the penny pinching / stick it to the man / junky variety).

Jonanin• 7 years ago

500 years ago, only 1-2% could afford "whatever" and the rest had to scrap by and pinch pennies. I'm not sure we're moving to a world of less evenly distributed wealth.

coldtea18• 7 years ago

Only we're not beasts. Wealth is social and relative based on the era.

E.g. nobody feels like a champion as a unemployed homeless in LA, or a single mom making ends meet hand-to-mouth, just because 8000 years ago other people lived in caves, died at 30, and where often hunted by wild animals...

The change compared to not-so-distant decades, when a single-income middle class family had a job for life, could afford a house, and college education for their kids -- compared to living paycheck to paycheck is more relevant to whether we enter a world of more inequality, than what they did in the caves or the wild west.

iheartpotatoes2• 7 years ago

Cute, but facts?

NeedMoreTea2• 7 years ago

Now compare 60 years ago with now.

jrochkind12• 7 years ago

Probably the "normal distribution" of pricing/purchasing didn't apply 500 years ago either, in pre-proto-capitalist Europe or anywhere else.

specialist• 7 years ago

What do you think our society's Gini Coefficient should be?

https://en.wikipedia.org/wiki/Gini_coefficient

michaelmrose7• 7 years ago

Better than 500 years ago but worse than 50 years ago seems like a bad standard to strive for.

closeparen2• 7 years ago

Inequality is not “top X%” vs. “the rest.” Every part of the distribution is stretching. Every pair of points is further apart than it used to be.

coldtea18• 7 years ago

Well, middle class now is closer to working class precariousness, than before, so it's not exactly that "every pair of points is further apart than it used to be".

zeroonetwothree• 7 years ago

In 1980 median house price in SF was $200k. Median US household income was $17k. So it wasn’t exactly affordable and of course the Bay Area is much more appealing now so it makes sense that relative prices have risen.

In Manhattan rent in 1980 was around $1200 for a one bedroom, so it’s not even significantly different.

kristianc• 7 years ago

In Manhattan rent in 1980 was around $1200 for a one bedroom, so it’s not even significantly different.

A 1BR in Manhattan is around $3500 now. Have salaries really tripled in that time?

coldtea18• 7 years ago

"Average rents may have been pretty high, but crime rates were high and many parts of New York were more than gritty. As such, there were a lot of cheap places to live, especially Downtown and in Brooklyn. The Lower East Side offered a lot of options for the $300 price range; June 1982 ads show a Ludlow Street studio and a two-room East 2nd Street apartment (in a "well kept locked building") both for $275. For a real bargain, one could rent a four-room unit at 332 East 4th Street for $295. Across the river, a "charm 4 rms" on a "beaut blk" near BAM was listed for $325, while units in a Williamsburg walk-up were asking $275 to $325."

tomrod• 7 years ago

Back in the 50s and up to the 80s a signle-income middle class household could still send a kid to college, buy a house, and so on

For some parts of the US, yes, but it would be a generalization error to assume this was a common condition for everyone.

bko2• 7 years ago

It's a world where a 10-20% can afford the "whatever" (e.g. best phone, live in NY/Bay area, university degree, etc) and the rest have to scrap by and increasingly pinch pennies (while still doing some desperate wealth-signalling purchases, like poor urban blacks that buy $200 sneakers to feel like they have something nice and can participate in the kind of society they see in ads).

I don't see why "poor urban blacks" buying $200 sneakers is a "desperate wealth-singalling purchase". Maybe they just like them. I don't see how its any different that the 10-20% buying the "best phone" when it provides no greater utility than a cheaper model.

And living in NY or the Bay are was still very affordable (to the point that both areas had large artistic / bohemian communities living there, and not of the latte sipping urban wealth variety, but the penny pinching / stick it to the man / junky variety).

I would think as neighborhoods become safer and more gentrified, the number of people that want to live there increases and naturally the price to live there increases as well. Comparing crime ridden NYC from 50 years ago to NYC today makes no sense.

coldtea18• 7 years ago

I don't see why "poor urban blacks" buying $200 sneakers is a "desperate wealth-singalling purchase". Maybe they just like them.

According to economists Banerjee & Duflo: “The poor are skeptical about their supposed opportunities, and the possibility of any radical change in their lives…Therefore, they focus on the here and now, on living their lives as pleasantly as possible, and on celebrating when the occasion demands it.”

I don't see how its any different that the 10-20% buying the "best phone" when it provides no greater utility than a cheaper model.*

The difference is that for the 10% that is an insignificant amount, and they still can cover their more basic needs with aplenty left anyway.

pdkl95• 7 years ago

I don't see why "poor urban blacks" buying $200 sneakers is a "desperate wealth-singalling purchase".

Far too often sending the right kind of signal is a required prerequisite[1] to e.g. being granted access to a job that might eventually become a better-than-minimum-wage career. Often wealth isn't the intended signal; it's a presentation of having accepted and converted to a group's culture or beliefs.

[1] https://tressiemc.com/uncategorized/the-logic-of-stupid-poor...

badpun3• 7 years ago

Back in the 50s and up to the 80s a signle-income middle class household could still send a kid to college, buy a house, and so on.

In the US. Meanwhile much of the rest of the world was mired in communism, which created incredible poverty and misery. After the 80-ties when it was finally overthrown for the most part, those billions of people start competing on equal ground with the US, which equalizes the global situation a bit.

wozer• 7 years ago

The wealth is still in the US, though. It did not go to other countries.

coldtea18• 7 years ago

In the US. Meanwhile much of the rest of the world was mired in communism, which created incredible poverty and misery.

Depends on where of the world.

Most of the rest of the world in the 50s (aside from eastern Europe, USSR and China) was anything but communist.

And even the communist (socialist) parts, where not really about some "incredible poverty" (e.g. in places like Yugoslavia, Czechoslovakia, and so on, just substandard middle/working class existence. Everybody there could get a job, healthcare, college education, and a house, for one.

m1sta_• 7 years ago

There is still a lot of cheap housing in the USA. It's just not in the bay area anymore.

ip263• 7 years ago

I grew up in the bay, and I definitely did not understand this until I left. I generalized my life experience to the whole country.

jgalt2125• 7 years ago

True, but unless you are a doctor, high wage jobs are few and far between in cheap cost of living areas. Perhaps, that's why they are cheap to live in. :)

paulddraper5• 7 years ago

I bought my first house in 2015 in Utah, about 20 min from downtown Salt Lake City. Was not anything special.

1976 construction, 2000 sqft, 0.2 acre, 5 bed, 3 bath, 2 car garage, average condition, just under $200k.

Glassdoor average salary for "Software Engineer" (not Senior, etc.) in Salt Lake is currently $89k, 14% less than national average. [1]

Single-income house ownership is extremely common here.

[1] https://www.glassdoor.com/Salaries/salt-lake-city-software-e...

heavyset_go• 7 years ago

Cheap housing exists in areas of low-to-negative growth. As in, those who got out did and those who can get out will in order to find better jobs and a higher quality of life.

jgalt2125• 7 years ago

It's a world where a 10-20% can afford the "whatever" (e.g. best phone, live in NY/Bay area, university degree

not so sure about that line. Many of the whatevs are scraping by.

https://www.financialsamurai.com/scraping-by-on-500000-a-yea...

throwawayjava5• 7 years ago

Nearly every line of that budget screams "luxury", with the exception of two things:

1. The skyrocketing cost of college really does create enormous problems. I'm assuming the family profiled are either doctors or lawyers, because otherwise those $32K/yr payments would only last for a few years at most. (I paid $40K/yr in loans for both my wife and I when I got my first real job, but that happened exactly once... and we weren't buying BMWs or Land Rovers while we were doing it.)

2. Pensions, which have largely eroded away in the private sector, were enormously valuable. The switch from pensions to 401(K)s without a significant corresponding increase in pay is one of the most significant ways in which the real value of take-home pay has declined in the past 30 years.

But everything else could be cut in half, probably without even noticing:

1. $42K/yr on childcare is au pair/"elite" preschool money.

2. $5,000/mo mortgage is pretty high, even for a family of four in a high CoL area.

3. Three vacations a year @ $6,000 a pop. I take more than three vacations a year, but most of them are closer to $500 for a family of 4 (camping/backpacking). The expensive ones never get higher than $3,000. There's "getting away from work for a while" and then there's "flying a family of 4 to Paris a few times a year". The former is not a "luxury" especially for a high stress job, but the latter definitely is.

4. Luxury cars. For $10K they could buy a perfectly functional new car (which would last 10 years) every year. The only way that these are not "luxuries" is if they're required for work.

5. $3K on clothing per year, every year. That's high even for someone who has to dress nicely for work. Yes, nice suits are expensive, but they also last a long time. And your kids definitely don't need "meetings with high value clients" clothing.

6. $1K/mo on "children's lessons". I know how this happens, because I charged up to $100/hr for private tutoring while in grad school. But it's entirely unnecessary. It really is OK for your kid to get a B in an AP course. And if they need $100/hr quality tutoring for every course they're taking, the real world is going to be a rude experience. Also, $1K/mo on "children's lessons" while the kids are also young enough to need childcare is absolutely insane.

gshdg• 7 years ago

In that regard, the mid-20th century is an anomaly in human history.

Which is not to say we shouldn't aspire to such a relatively even income/wealth distribution. However, the political will for progressive taxation - which facilitated that level of equality - has been on the wane since the 70's. Possibly related to the extreme American economic dominance in the Post-WWII era, which we shouldn't expect to ever see again.

roenxi5• 7 years ago

To me all these bifurcations seem to me to stem from a change of a world of more evenly distributed wealth (for working, lower middle, and middle class) and one with wild inequality.
Back in the 50s and up to the 80s a single-income middle class household could still send a kid to college, buy a house, and so on.

Is the right word inequality? There aren't less college places, houses in NY/the Bay, etc in the world than there were in the 80s. By extension, the problem is not enough new wealth creation rather than inequality.

I'm open to being wrong, but at a guess there aren't all that many rich people who consume more than 2 degrees, live in 2 houses, etc. There are those that do, but they are relatively rare. Mostly they just get first pick from the existing stock, except in housing where they buy but then rent out in my experience, so it isn't exactly removing stock from general availability. If the rich disappeared tomorrow, would that free up enough resources that the poor could all have "whatever"?

I've no answer, but rhetorically I doubt it. The rich physically can't consume that many resources in absolute terms.

pryelluw• 7 years ago

Yes, I think the word inequality is correct. It comes as a result of hoarding wealth.

michaelmrose7• 7 years ago

The resource they consume is wealth. It's disingenuous to claim that a wealthy person does not consume more resources. Houses are a particularly poor example.

A wealthy person may have a 2. 5 million mansion and a quarter million dollar vacation home and own 3 rental homes.

They may trivially capture some of the resources available for others housing by buying up the housing supply and renting for more than the cost of the mortgage while fighting to maximize the value of investment by limiting the supply of new housing.

With 40% of their neighbors paying rent to people like them and some living on the street it's hard not to qualify the situation as unequal.

bhl• 7 years ago

Yes, the right word to describe this bifurcation is inequality. It's correct to note that the absolute number of available housing and students going to university are up, but relatively compared, people are finding harder to do both because the number of available spots has grown slower than population growth.

At first glance, this may seem like an issue with not enough wealth creation: why are there not more houses and universities being built? But when you look at productivity versus income [1], the issue is with the unequal capture of wealth not with its creation.

[1] https://www.epi.org/productivity-pay-gap/

Zarath• 7 years ago

Back in the 50s and up to the 80s a signle-income middle class household could still send a kid to college, buy a house, and so on. And living in NY or the Bay are was still very affordable (to the point that both areas had large artistic / bohemian communities living there, and not of the latte sipping urban wealth variety, but the penny pinching / stick it to the man / junky variety).

Houses are very affordable in almost every part of the country. Buying a home is really not that difficult.

BurningFrog4• 7 years ago

One reason people could afford to live in NYC in the 80s is that it was a dystopian murderous hellhole. Watch this trailer for the 1981 move Escape From New York for a taste: https://www.youtube.com/watch?v=ckvDo2JHB7o

CPLX2• 7 years ago

While NYC certainly had a street crime problem then, video from a fictional sci-fi movie where New York is converted to a lawless prison island for criminals is a remarkably poor way to support your argument.

unreal373• 7 years ago

One phenomenon in the "concert ticket" space is that promoters have discovered a way to dynamically price tickets. So you'll pay the concert promoter $1000 to sit front and center.

So instead of all floor tickets being $100, there are some floor tickets that are worth way, way more than others. Even "row 1" tickets up in the 3rd deck are more than row 2 tickets in the same section now.

Ticket pricing has evolved to maximize profits at the source. The value of the tickets is very close to their retail price.

So if you ask "how much would you pay for Taylor Swift tickets", the answer is "depends on what row".

mac01021• 7 years ago

Caring about something is not a binary, all-or-nothing affair. I care about some things a lot, others a fair amount, and yet others quite little.

And for most of the examples given in the OP, I still find myself landing in the middle, between two supposed modes.

So I guess I'm not entirely convinced.

narrator• 7 years ago

I wish this guy had some data to back his ideas up.

cfarm2• 7 years ago

Yes - it would be interesting if you could somehow tie this to our record low unemployment and low inflationary environment.

stackzero• 7 years ago

I like the idea but it seems the author is just slicing the normal distribution at a point of interest and calling it bifurcated? e.g. with the phone example. "good enough android" or "iphone / flagship android" all the actual phone models are hidden under two higher level labels. Isn't every decision making process with buying essentially try to get the best for your money?

mywittyname• 7 years ago

Lots of things follow a Pareto distribution (which is what the author is describing). This is the default distribution for anything that relies on network effects and competes in a market with limited availability.

Famously, word usage follows this pattern (Zipf's law). But other things such as wealth accumulation, product usage, celebrity fame, upvotes on Reddit, etc all have this distribution. It's not possible for every person to read every post, evaluate every possible drink, or watch every movie, so they settle on one of the most immediately available options. So they drink a Coke while watching The Avengers and upvote the top-rated comment on Reddit about it.

The Access Economy: Why the Normal Distribution Is Vanishing (2015)

Related Stories