📚 node [[measuring the 1 economists are rethinking the numbers on inequality]]
📕 text contributed by @protopian

Measuring the 1% - Economists are rethinking the numbers on inequality

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  • But this introduces a bias. Marriage rates have declined disproportionately among poorer Americans.
    • Note: It seems to me like households (or “tax units”) is the more natural measure to use here because those are the units that generally and ultimately matter for income and household spending, whether individual or joint. If you want to call it a bias, sure, but one could call basing it on individuals also biased because joint households are represented twice, distributing their larger incomes more broadly, whereas households with one earner still are the same. There are trade offs between the approaches and it doesn’t seem obvious that the individual approach is as useful for what inequality actually represents on the ground at the household level where it matters most.
  • But capital gains also reflect the chosen timing of the seller and movements in the stockmarket, making them volatile. For these reasons, Messrs Auten and Splinter ignore capital gains and instead count corporations’ retained earnings from year to year.
  • And whereas taxable capital gains are concentrated among the rich, workers own lots of shares through their tax-free retirement accounts.
    • Note: What I’m seeing is that their methodology changes all happen to minimize or negate the aspects that are strongest for the wealthy.
  • It is a tricky exercise because two-fifths of GDP does not show up on individuals’ tax returns.
    • Note: Well that seems to be a problem.
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