In the news lately, there’ve been a few particularly egregious examples of bad math. One that really ticked me off came from Alan Simpson. Simpson is one of the two co-chairs of a presidential comission that was asked to come up with a proposal for how to handle the federal budget deficit.
The proposal that his comission claimed that social security was one of the big problems in the budget. It really isn’t – it requires extremely creative accounting combined with several blatant lies to make it into part of the budget problem. (At the moment, social security is operating in surplus: it recieves more money in taxes each year than it pays out.)
Simpson has claimed that social security must be cut if we’re going to fix the budget deficit. As part of his attempt to defend his proposed cuts, he said the following about social security:
It was never intended as a retirement program. It was set up in ‘37 and ‘38 to take care of people who were in distress — ditch diggers, wage earners — it was to give them 43 percent of the replacement rate of their wages. The life expectancy was 63. That’s why they set retirement age at 65
When I first heard that he’d said that, my immediate reaction was “that miserable fucking liar”. Because there are only two possible interpretations of that statement. Either the guy is a malicious liar, or he’s cosmically stupid and ill-informed. I was willing to accept that he’s a moron, but given that he spent a couple of years on the deficit commission, I couldn’t believe that he didn’t understand anything about how social security works.
I was wrong.
In an interview after that astonishing quote, a reported pointed out that the overall life expectancy was 63 – but that the life expectancy for people who lived to be 65 actually had a life expectancy of 79 years. You see, the life expectancy figures are pushed down by people who die young. Especially when you realize that social security start at a time when the people collecting it grew up without antibiotics, there were a whole lot of people who died very young – which bias the age downwards. Simpson’s
response to this?
If you’re telling me that a guy who got to be 65 in 1940 — that all of them lived to be 77 — that is just not correct. Just because a guy gets to be 65, he’s gonna live to be 77? Hell, that’s my genre. That’s not true.
So yeah.. He’s really stupid. Usually, when it comes to politicians, my bias is to assume malice before ignorance. They spend so much of their time repeating lies – lying is pretty much their entire job. But Simpson is an extremely proud, arrogant man. If he had any clue of how unbelievably stupid he sounded, he wouldn’t have said that. He’d have made up some other lie that made him look less stupid. He’s got too much ego to deliberately look like a credulous drooling cretin.
So my conclusion is: He really doesn’t understand that if the overall average life expectancy for a set of people is 63, that the life expectancy of the subset people who live to be 63 going to be significantly higher than 63.
Just to hammer in how stupid it is, let’s look at a trivial example. Let’s look at a group of five people, with an average life expectancy of 62 years.
One died when he was 12. What’s the average age at death of the rest of them to make the overall average life expectancy was 62 years?
So in this particular group of people with a life expectancy of 62 years, the pool of people who live to be 20 has a life expectancy of 74 years.
It doesn’t take much math at all to see how much of a moron Simpson is. It should be completely obvious: some people die young, and the fact that they die young affects the average.
Another way of saying it, which makes it pretty obvious how stupid Simpson is: if you live to be 65, you can be pretty sure that you’ll live to be at least 65, and you’ve got a darn good chance of living to be 66.
It’s incredibly depressing to realize that the report co-signed by this ignorant, moronic jackass is widely accepted by politicians and influential journalists as a credible, honest, informed analysis of the deficit problem and how to solve it. The people who wrote the report are incapable of comprehending the kind of simple arithmetic that’s needed to see how stupid Simpson’s statement was.
Well, he is right that not all of the people that live to 65 make it to 77. Many will, maybe even most will (not sure of the actual death rates at that age). But from this absolute way of looking at things, it sounds like he thinks SS was a scam. After all, if the life expectancy is 63 and the retirement age is 65, then nobody is going to be able to make a claim right? They will all be dead.
On the other hand, SS was designed with the idea that there would be fewer claimants than contributors. And if it is making a surplus now, how long will it continue to do so? It doesn’t seem to be an indefinitely sustainable model. Of course, any change in the program isn’t going to involve giving the money back, will it?
On the other hand, SS was designed with the idea that there would be fewer claimants than contributors.
Since the major increase in life expectancy is down to reduced infant mortality the number of contributors has also gone up almost as much.
Couldn’t agree more on Simpson’s misunderstanding that life expectancy can grow as you age. Counter-intuitive but true.
At the risk of turning this into a political flamefest, it doesn’t matter that SS is running a surplus since that surplus is being spent on day to day government operations. Once the SS trust fund starts cashing their bonds, the federal government either runs a huger deficit or needs to dramatically raise taxes. It might be a different story if the trust fund were invested in regular stocks and bonds but it’s not.
It might be a different story if the trust fund were invested in regular stocks and bonds but it’s not.
Here you fall into another typical trap, the “government finance it like household finance ” fallacy.
It makes no difference if the government invests the SS fund in equities (which is why the government doesn’t do it). Whatever is consumed by retirees has to be produced by the working population. The funding mechanism is irrelevant. All that matters is the willingness of the working population to fund the retired population. Nothing else matters.
Of course those who suggest that the government should invest the SS fund in equities would be horrified if the government proposed to fund SS by nationalising certain firms – but of course these two are actually the same thing!
Whatever is consumed by retirees has to be produced by the working population.
I don’t see how that’s true if the SS surplus is invested in productive assets that generate a positive return. The taxpayers don’t have to contribute quite as much if we pay retirees with Google earnings. But that’s neither here nor there because that’s not where the surplus SS taxes goes.
But that wasn’t my point. I believe we agree, future taxes of some form (FICA or income taxes) will pay for future retirees and the supposed trust fund just obscures the issue.
I concur that investing the SS trust fund in equities is tantamount to nationalizing many firms. It’s a scary prospect, one I do not support. I’d far rather see individually owned and controlled retirement accounts.
What’s more, the age of 65 for retirement comes from Bismarck’s “Old Age and Disability Insurance Bill of 1889”. It established the standard for this kind of thing throughout the world, including the retirement age. Simpson’s doubly ignorant: he’s ignorant of the maths, and he’s ignorant of the reason the retirement age is what it is, which is essentially because the average Prussian lifespan at the time was around 45 to 50 years, which fits with the maths.
He also seems to be just missing the point that life expectancies have gone up in part due to drastically reduced infant mortality. When one looks at the life expectancy after you cut off some young age (after 3 years and after 12 years are both common) then the life expectancy of someone born 50 years ago looks not that much larger than that of someone born 100 years ago or 120 years ago.
Nononono, you’ve got it all wrong.
He’s definitely being a malicious liar. You see, to the people who were smart enough to spot the mistake in the first place, he sounds like a drooling moron. To everyone else (who he’s actually talking to with this statement) he sounds like the no-nonsense, common-sense, what-do-these-prissy-liberal-academics-think-they’re-on-about guy who’s going to sort out the economy.
(Do people use the word “prissy” in the US?)
> If you’re telling me that a guy who got to be 65 in 1940 — that all of them lived to be 77 — that is just not correct. Just because a guy gets to be 65, he’s gonna live to be 77? Hell, that’s my genre. That’s not true.
Nothing about that quote you cited suggested that he didn’t believe 77 was the average of those who made it to 65. He correctly stated that given the fact (back then) if you live to 65 you are not guaranteed to live to 77. If that’s what he *meant*, that’s NOT what he *said*.
It is possible he said this because he mis-understood the concern given to him. Perhaps someone said something like, “Workers who lived to 65 lived to 77.”
You need stronger quotes to make the case that he misunderstands this. Got any links?
That quotation shows he is a prevaricator, because it has been carefully formulated to create a misimpression for some of the reasons pointed out by theshortearedowl up above. This is, by the way, a classic debate trick, said in the hope that your opponent will claim you are a liar when the only thing false about your syllogism is the assumption it starts with.
What makes it a prevarication is that he knows the interviewer will not interrupt him like this: “NO, I said the life expectancy a 65-year-old was 79 back in 1940, not that he would live to 77. Do you know what “life expectancy” means? If not, you have no business talking about the actuarial soundness of Social Security.”
What did he do next, deliberately conflate Medicare’s funding structure with that of Social Security? Forget to mention that 65 is no longer the retirement age, or that the minor problems of SS can be fixed with a minor tweak like the one made a decade or so ago?
The real problems are (1) the federal government will soon have to stop borrowing from Social Security and (2) the Republican driven cut in the “payroll tax” this year has made the problem worse. Whether (2) was done with the purpose of destroying Social Security can only be inferred from what Rep. Ryan and others have said.
Whoops, above I said:
> If that’s what he *meant*, that’s NOT what he *said*.
but that was ambiguous in the context of what I wrote. What I meant was:
“If he *meant* to say that the average was not 77, that’s NOT what he *said*.”
As a politician he has a degree in professional bullshitting. It is therefore extremely difficult to know whether he is deliberately altering the truth or displaying his total lack of intelligence and education. Knowing the politicians of my country I would probably bet on both.
I think this might just be another case of well-informed denial; If someone feels very strongly about a certain subject, reading more about that subject will only make him feel more convinced, even if it’s obvious that the other side might have a point.
See for example: http://blogs.discovermagazine.com/intersection/2011/05/03/climate-change-and-the-problem-of-well-informed-denial/
How exactly is this bad math?
X= total number of work hours put in by earning people…ages 20 – 65 (say)
Y = total number of years people who live to be 65 need to be supported after that.
Social security income is directly proportional to X
Social security expenditure is directly proportional to Y.
Now, with advances in medical science; which do you think has grown faster; X or Y ? Did medical advances increase the working ability of men and women in their prime working years (20–65) or did it increase much more the ability of old people to stay alive?
You’re missing productivity – the amount of wealth generated per man-hour of work. There have been absolutely massive gains in productivity over the last few decades. Unless I’m drastically misunderstanding how it’s funded (and I’m in the UK, where National Insurance is progressive rather than flat-rate) social security income is not directly proportional to hours worked, it’s proportional to hours worked times productivity.
Simpson: If you’re telling me that a guy who got to be 65 in 1940 — that all of them lived to be 77 — that is just not correct. Just because a guy gets to be 65, he’s gonna live to be 77? Hell, that’s my genre. That’s not true.
Me, to Simpson: No, the reporter isn’t telling you that “all of them lived to be 77.” That’s an average . That’s why it’s called life expectancy instead of life certainty.
I have held off commenting on items at this site (which I find massively informative, educational, and more than occasionally entertaining – thanks), but the technical programming language stuff is way beyond me, though not most of the more general mathematical topics. However, you are now addressing a topic that is pretty much in my field – actuarial science. Of course the senator showed a basic lack of understanding of population statistics and the force of mortality improvement, etc., and doesn’t look too good in doing so given the circumstances. As I read the comments, though, I didn’t see anyone directly discuss the fact that improvements in mortality from healthcare system capabilities (as well as other general factors) have increased the “relative” share of people reaching the retirement age in the first place (which also increases the number of “worker hours” paying into the system along the way as is pointed out by SS who touches on the fringe of my point). So it is not only the issue of how long do people live who reach 65, but the relative share of them to the entire population. That is a material part of the problem, because it feeds the actuarial present value of promised benefits, which is the primary reason that the system is not really in surplus. To claim that just because more money is coming in now than is going out on a cash basis does not mean it is in “surplus” in a true (or at least, actuarial) sense. Further confusion arises within the general public from the magical ability that many in the government have demonstrated in claiming that there is, indeed, a “trust fund” for all these recent overages of payments in versus payments out. An IOU from one part of the government to another is not an allowable offset. It is similar to HHS double counting “savings” from healthcare reform’s Medicare provider fee cuts, claiming it both lowers Medicare needs and can also be used to pay for other aspects of the reform bill. Politicians on every side force us to choose from one of the two proffered impressions – they are malicious, or stupid – however, I don’t think it is an exclusionary “or” (agreeing with hijodelachingada).
Thanks HD Carroll for your post. Most people do not understand the difference between Life Expectancy vs the Life Expectancy at a particular age. (2 very different things) Also SS is an intergenerational transfer tax. It is not a savings account. The government has given people the impression that it is an individual savings account. Common misconceptions. Glad better information is getting out there. I do not know if the Senator’s statements are due to his lying (I see a lot of that from Politicians) or he is ignorant. (I see a lot of that also)
“Stupid Blogger Tricks; aka Strawmen are fun to tear down”
Sorry, but both of Alan’s quotes are true. Don’t be blinded by your own political bias.
While life expectancy may not have as close a relationship with amount of social security benefits withdrawn as you would like, it is a useful metric to demonstrate succinctly why the program is not designed in a sustainable way at this time.
Not to mention it is a coercive ponzi scheme in the first place.
For every year older that you get, your life expectancy increases. However, the oldest (documented) man recently died at 114 (the oldest woman is older). No idea what his life expectancy was when he turned 114. How often does that happen? But his life expectancy certainly wasn’t still 70’s.
To get a better idea of your life expectancy, you might add your height and weight. This can inform if you’re overweight, and that can lead to various diseases. And you might think that this is so much better of a predictor that the case is solved. However, it turns out that your cardiovascular fitness is a much better predictor still. That is, you can be massively overweight, but physically fit (it’s not easy), and your group will perform well, statistically.
One hears that modern medicine has doubled life expectancy in that past hundred years. But without more information, this isn’t of much help, and is likely misleading.
Life expectancy has increased… but you have to remember that the dominant factor in life expectancy increase is death during childhood.
If you look at the life expectancy of adults, it’s changed, but not that dramatically; particularly not in the last 50 years. The last major spike in adult life expectancy came with the invention of antibiotics. It’s crept upwards slowly since then, but absolutely not in any dramatic jumps. The jumps all come from kids not dying.
The problem with adding height and weight and stopping there (aside from the fact that the units aren’t commensurate) is that there’s no evidence that the results actually correlate with anything useful. (“BMI,” which has similar problems, is generally given as a dimensionless number, probably because nothing else is measured in kg / m^-2. So, first, there’s no easy name for it, and second, “27” sounds more meaningful than “27 kilograms per meter squared” let alone “per square meter.”
@Vicki: You can measure rainfall, paint coverage or anything else that is a mass per unit area in kg/m².
Anyway, surely they wouldn’t use the mean as an indication of life expectancy? It’s a blind range (you can’t live for less than -40 weeks), so the median would be more appropriate. The point where the slope was steepest on the graph of “percentage of total population dead by this age” against age might well tell a few stories, too.
Funny how being in a position of power makes you think that everything you do is right. Simpson needs to take a step back and realize his mistakes… Or at least find ways to address his points with some logic backing them. Oops.
If a voter has contributed to Social Security for 30 or 40 years … why on earth would they let their benefits go without a fight?
Note – I am not American – maybe the average American does not realize that SS contributions are part of his compensation package?
Given the huge population of Baby Boomer voters, why does this issue keep being raised as if SS is a “gift” that is bestowed on lucky taxpayers? Why don’t the contributers feel that they own this pension?
I know what it has cost me to participate in my government pension plan for the last 50 years. I’m expecting the agreed-upon payout Any unfavourable changes will be met with political action, from the group with more free time than any other.
Re: HD Carrol,
Interesting counter-perspective- I catch your point that as the U.S. population gets generally older, the proportion of SS beneficiaries to contributors increases. But I don’t understand why it’s not called a surplus, in actuarial terms, if your revenues exceed your costs. Can you please elaborate?
Personally, even I, basically an elementary teacher of math, was able to understand your equation and how it was derived when I looked through it. I don’t believe that Simpson wasn’t able to understand this, either.
What I do think is that being a Republican, he is opposed to the IDEA of having Social Security at ALL. I have been hearing this same tune from my father since I was a little kid at the dinner table even in the late 50’s and early 60’s. This group of people believes that ANY kind of transfer payments are STEALING from the productive members of society to give to the unproductive members. My Dad used to lecture me since I was a first-grader in 1961 on the “evils of social security” and how it “had to be destroyed.” Watching today’s politics, it seems this is the REAL agenda–get rid of welfare, food stamps, medicaid, any government help with heath insurance or socialized medicine, and of course, eventually, even social security. It seems the current agenda, since in cannot be achieved legislatively, is to simply DEFUND all the programs through continuing tax cuts until they collapse.
Therefore, I believe that Simpson DOESN’T CARE about the math–he’s just twisting figures around to “scare” people and use them for his own purposes, in a way that he can “pretend” that he thought he was making honest statements.
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