It is Innumeracy Day at the Times as math and common sense get tossed out the window.
Let's start with David Leonhardt of Upshot, who mangles some basic arithmetic in an article about the student loan non-crisis.
Excerpting his key factoids:
The Reality of Student Debt Is Different From the Clichés
In fact, the share of income that young adults are devoting to loan repayment has remained fairly steady over the last two decades, according to data the Brookings Institutions is releasing on Tuesday.
I realize that the stories of student debt are so common and visceral that many readers will view the Brookings argument with some skepticism. So let me walk through it.
The first thing to acknowledge is that student debt has risen over the last two decades. In 2010, 36 percent of households with people between the ages of 20 and 40 had education debt, up from 14 percent in 1989. The median amount of debt — among those with debt — more than doubled, to $8,500 from $3,517, after adjusting for inflation.
The incomes of college graduates have grown since the early 1990s. And the repayment time for many loans has become longer. This combination creates perhaps the most surprising fact from the Brookings data:
The share of income that a typical student debtor has to devote to loan payments is only marginally higher than it was in the early 1990s — and somewhat lower than it was in late 1990s. It was 3.5 percent in 1992, 4.3 percent in 1998 and 4 percent in 2010.
Taking all this at face value we conclude that the number of households with student loan debt has increased from 14 percent to 36 percent, a 250% increase. The debt burden (adjusted for income) as a proportion of income per household with debt has not changed. Ergo, if 2.5 times as many households have taken up this burden then the total payments made by ALL young adults, debtor and non-debtor alike, has soared.
How can that possibly be squared with his bold intro (third paragraph online) that
In fact, the share of income that young adults are devoting to loan repayment has remained fairly steady over the last two decades...
It can't. Young adults as a class are spending roughly 2.5 times more on debt service (adjusted for income), which means they have less money available for other things.
If twenty years ago 6 percent of the population had tuberculosis and today it was 15 percent I am reasonably cionfident that Mr. Leonhardt would not assure his readers that there was no public health crisis because the people suffering from TB today weren't coughing harder or any more feverish than the sufferers of twenty years ago.
If twenty years ago 4 percent of New Yorkers had been victims of auto theft and today that figure was 10 percent, I doubt Mr. Leonhardt would argue that there was no problem because the value of cars had only tracked with inflation, so really, nobody had lost more.
FWIW the Brookings people manage to summarize this correctly:
Ultimately, Akers and Chingos conclude that typical borrowers are no worse off now than they were a generation ago...
They also note (as summarized by Mr. Leonhardt) that, although the increased prevalence of indebtedness may have macroeconomic effects on, for example, housing, the data is not in to support that.