There's something really fishy about US historical inequality data in the new Piketty et al "World Inequality Report," especially pre-WWII.
Dashed red line was his old series, solid line is new one.
Yet corrections to his pre-WWII (dashed blue) should have *lowered* inequality.
Dashed red line was his old series, solid line is new one.
Yet corrections to his pre-WWII (dashed blue) should have *lowered* inequality.
Here's the reason. Piketty's report is trying to make a strong causal claim that progressive taxation & spending policies made inequality decline after WWII.
This is not accurate though.
This is not accurate though.
In reality, the Piketty series' depicted WWII drop (1941-45) is almost entirely a statistical relic of unaccounted for changes in IRS data reporting + Piketty's failure to reconcile his denominator to IRS accounting.
Most of the decline happened pre-WWII bc of the Depression.
Most of the decline happened pre-WWII bc of the Depression.
For closer reference, see 1941 - the US entry into WWII - on the chart.
Piketty shows a huge drop after 1941. Corrected series shows only a small drop.
Reason: Piketty doesn't account for changes to how the IRS reported data in 1943, & doesn't correct his denominator to match.
Piketty shows a huge drop after 1941. Corrected series shows only a small drop.
Reason: Piketty doesn't account for changes to how the IRS reported data in 1943, & doesn't correct his denominator to match.
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