Monday, March 31, 2014

Inequality: on the Misuse of Statistics

Prof. Mankiw of Harvard linked to this Brookings study on inequality.  It's interesting, and makes the valid, I think, point that our tax/safety net system means lower income people are protected against volatility.  But it fails, at least in my quick reading, to note that figures based on the 2000-2010 period, as its are, will give misleading results.

Why?  Because 2000 was the peak of the dot com bubble in the stock market, while 2010 was early in the recovery from the Great Recession.  The net effect is to understate the income gains of the top 1 percent, and .1 percent and .01 percent.  

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