La Tiranía del Promedio

The Problem with “Average” Policy

Policies designed for the “average” person often fail everyone.

Imagine we are designing a tax relief program. The “average” income in our district is $15,000 MXN/month. A policy maker suggests a flat tax credit because “the average family is doing okay.”

But is the average real? Let’s look at the data.

Interactive Lab: Simulating Inequality

Run the code below to generate a realistic income distribution for a Mexican municipality. We will use a “log-normal” distribution, which matches real-world wealth inequality better than a bell curve.