Thread by @swinshi

OK. I'm starting a thread on economic inequality to push back against an avalanche of misguided, empirically unsupported claims about inequality and its costs. Will add to it periodically. /1

First, did you know that you're almost surely basing your overstated conclusions about the rise of income concentration on out-dated estimates from Piketty and Saez? Their own estimates show much less growth now, after listening to critics. /2

Second, did you know that Piketty and Saez have never once attempted to quantify the economic, social, or political costs of rising income concentration? That's because it's a very hard question to answer! So your strong priors are basically empirically unsupported. /3

Here's my look at the evidence on whether inequality's costs are large. Answer: totally unclear /4 nationalaffairs.com/publications/d…

Did you know that multiple studies, including by Raj Chetty, have found only a weak correlation across countries and across US states between income concentration and economic mobility? Links toward the end of this: /5 economics21.org/html/collapse-…

Did you know that the evidence as to whether countries with more inequality have lower growth is all over the map? /6

See the review in this paper, where I also find that countries with more inequality have somewhat higher middle class incomes and somewhat lower poverty than countries with less inequality. /7 economics21.org/html/inequalit…

Also, since the 1980s, when income concentration goes up, middle class incomes go up and poverty goes down. When it falls, the middle class and poor also do worse. That's because income concentration mostly only falls during recessions. /8

Did you know that workers are not getting less relative to capitalists than in the past? /9 google.com/url?sa=i&sourc…

https://twitter.com/swinshi/status/948606587652005893?s=19

https://twitter.com/swinshi/status/856839117979693056?s=19

Did you know, Saez's famous revenue-maximizing top tax rate of 70% is based on a bad assumption (the wrong "elasticity of taxable income")? @AlanReynoldsEcn /10 cato.org/publications/c…

First up today: if we focused less on the overblown "problem" of income concentration, we could focus more on a very real inequality problem: the opportunity gap between black & white kids. (Again, no evidence the two are related.) cc @RichardvReeves /11 google.com/url?sa=i&sourc…

How I Spent My Lunch Hour. Kids, let me tell you a story about income growth. Piketty, Saez, & Zucman claim the bottom 50% have seen no income growth since 1979. Big if true! It's a radically different conclusion than you get from survey data on hh income /12

As I show in the chart in my first tweet above, research by Splinter & Auten shows the top 1% share rising by a lot less than PSZ do. That means their estimate of how the bottom 50%'s income changed is likely to show growth. /13

I couldn't find S&A estimates of the bottom 50%'s income, but I did find estimates of the bottom 90%'s income (davidsplinter.com/AutenSplinter-…). After inflation adjustment (using PCE), the bottom 90%'s income rose between 1979 and 2014 by between 73% and 126%. What do PSZ show? /14

Good question! Using what I believe is their preferred measure (pre-tax & -transfer national income, split between individuals equally), they show an increase over the same period of 27%. They show the bottom 50% falling by 2%. Hmmmm.... /15

That's using gabriel-zucman.eu/files/PSZ2017A…

CBO shows after-tax hh income for bottom 90% rose by 48%. Median rose by 45-51%. Bottom 40% by 50% (cbo.gov/system/files/1…)

PSZ show 37% for bottom 90%. (And an 18% rise for the bottom 50%.)

So careful of those PSZ #s! cc @jtrothwell /16