How to Distort Income Inequality

Bruce Kaskubar analysis Leave a Comment

A thoughtful article in the Wall Street Journal addresses a recent study that debunks another study about the growth of income inequality in the U.S. since 1979. The link requires a subscription — and the WSJ is worth it — so excerpts follow. Italicized text and graphics are my own. How to Distort Income Inequalityby Phil Gramm and Michael Solon Thomas Piketty and Emmanuel Saez published a famous study on the growth of income inequality in the U.S. since 1979. Problems with the underlying data significantly distort their conclusions. The chosen starting point for the most-quoted part of the Piketty-Saez study is 1979. In that year the inflation rate was 13.3%, interest rates were 15.5% and the poverty rate was rising, but economic misery was distributed more equally …