Naked Statistics: Stripping the Dread from the Data

by Charles Wheelan

Consider the George W. Bush tax cuts, which were touted by the Bush administration as something good for most American families. While pushing the plan, the administration pointed out that 92 million Americans would receive an average tax reduction of over $1,000 ($1,083 to be precise). But was that summary of the tax cut accurate? According to the New York Times, “The data don’t lie, but some of them are mum.” Would 92 million Americans be getting a tax cut? Yes. Would most of those people be getting a tax cut of around $1,000? No. The median tax cut was less than $100. A relatively small number of extremely wealthy individuals were eligible for very large tax cuts; these big numbers skew the mean, making the average tax cut look bigger than what most Americans would likely receive. The median is not sensitive to outliers, and, in this case, is probably a more accurate description of how the tax cuts affected the typical household.