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emmiesix Offline
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Post: #1
For discussion: wealth distribution in the US
You guys are pretty educated 03-wink so I'll assume you already know that wealth inequality is at historic highs in this country. Now an interesting paper comes out of Harvard Business School (top of the CV in the link) showing that people pretty much don't know this, nor is it how they think things should be! Interesting...

http://drfd.hbs.edu/fit/public/facultyIn...n&loc=extn

quoting from the abstract here:

Quote:First, respondents dramatically underestimated the current level of wealth inequality. Second, respondents constructed ideal wealth distributions that were far more equitable than even their erroneously low estimates of the actual distribution.

So.

1) Do you agree that the distribution is not what you consider ideal?

2) How would you go about fixing that?

One comment I thought very salient on the NPR posting was this:

Quote:It's not the income distribution that's the problem, it's the fear that the bottom 20-50% become so poor that they lose hope. That could lead to social instability, which then affects everyone. Revolution can happen anywhere, and it's not necessarily peaceful.
10-08-2010 09:36 PM
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OptimisticOwl Offline
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Post: #2
RE: For discussion: wealth distribution in the US
I guess the link didn't take me to where it should.

What I think is the ideal distribution is irrelevant, since I am not trying to impose that distribution on you or anybody. I wish nobody would try to redistrbute wealth either to me or from me. Let me have what I earn and let Emmie have what she earns and if we are happy with that, yay, and if either of us isn't, let us be the ones to get up off our rears and make it happen. I tend to think the important thing is reasonable equality of access to make the wealth each of us is satisfied with. Some people - I know one - can be very happy with four figure incomes and/or four figure net worths. Others can be happy with a house in the suburbs and a college education for the kids. If they're happy, who cares if by someone else's definition of the ideal distribution that they should have more/less than they have.

Equal distribution is a false ideal - it is like saying the ideal ecology is all elk and no wolves and no beaver.

So pick any distribution you like - I don't like it, because I don't think you should be picking for me.
(This post was last modified: 10-08-2010 10:21 PM by OptimisticOwl.)
10-08-2010 10:20 PM
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georgewebb Offline
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Post: #3
RE: For discussion: wealth distribution in the US
The time-honored governmental "solution" to inequality of wealth is to make everyone (or nearly everyone) uniformly poor -- and then to lock in that status permanently, instead of allowing individual wealth to fluctuate from year to year and decade to decade.

Compared to that outcome, I'd much rather put up with inequality.
(This post was last modified: 10-08-2010 11:02 PM by georgewebb.)
10-08-2010 11:02 PM
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Owl 69/70/75 Offline
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Post: #4
RE: For discussion: wealth distribution in the US
First, I see a few methodological issues with the referenced paper.
1. They never actually say where they got the wealth distribution for the US. They quote a bunch of authors that say it is unequal, then take this very unequal distribution and say that it represents the US. Maybe it does, maybe it doesn't, I'd rather they at least told me where they got it so I could go there and evaluate for myself.
2. They compare "wealth distribution" in the US with "income distribution" in Sweden. They're not the same thing. That difference is probably not material to the stated purpose of this study, but it is relevant to some of the inferences that I'm guessing the authors are hoping people would draw from it. One odd thing about the Swedish distribution is that it would appear that the second quintile is not the second largest, and that makes no sense mathematically.
3. As with any study based on a survey, I would like to see the actual study questions to evaluate what biases are reflected in the structuring of the questions. That answer is never "none" by the way, and I think the biases of the authors are pretty clear, so I'd like to be able to evaluate the extent to which the process may have reflected them.
Those are some questions I'd ask if I were peer reviewing this article.

Second, there's a big difference between a society where some people are poor now but there is great potential for upward mobility, versus one where the poor are locked into being poor. In the last 50 years I believe we've moved increasingly toward the latter. Everything I've seen suggests that. I can think of a couple of reasons. One, the "welfare trap" that imposes over a fairly wide range of incomes ($15,000-50,000 for a family of four in Fairfax County, Virginia, in one study I've seen, varies slightly from place to place) a situation where every dollar of additional income is entirely offset by a dollar lost to a combination of taxes and lost welfare benefits. In effect we impose a 100% tax rate on welfare recipients who go to work, a result that cannot be helpful. Funny thing, I do some volunteer work that inevitably leads me into conversations with welfare recipients; this comes up in conversation from time to time, and when it does the universal reaction that I get is, "You understand. I've never talked to anybody who understands this before." Second, the stuff Ross Perot talked about in the early 1990s, in our rush to become a retail/service economy, one casualty is high-paying blue collar jobs. You simply cannot pay someone as much to deliver pizzas or make burgers as you could pay his or her grandfather to make steel. If we don't want even greater wealth inequality to become a permanent condition, we need to find ways to attract value-added private enterprise back to the US. Right now, we're going the other direction.

Third, I agree totally with George's point. There are two ways to address income inequality--make the rich poorer or make the poor richer. Making the poor richer is better, but that's not the course that the present administration is trying.
10-09-2010 06:45 AM
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georgewebb Offline
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Post: #5
RE: For discussion: wealth distribution in the US
I sometimes wonder why redistributionists focus so much on money. Friendship and sex are also unequally distributed, and are much bigger determinants of human happiness. If one's goal is really to redistributively legislate our way to happiness, it seems one should start with those areas.
10-09-2010 08:50 AM
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emmiesix Offline
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Post: #6
RE: For discussion: wealth distribution in the US
(10-09-2010 08:50 AM)georgewebb Wrote:  I sometimes wonder why redistributionists focus so much on money. Friendship and sex are also unequally distributed, and are much bigger determinants of human happiness. If one's goal is really to redistributively legislate our way to happiness, it seems one should start with those areas.

Wow. Spoken as only someone who has enough to live on could. You do realize that being poor is a struggle, right?

I don't buy the fallacy that money buys happiness - I actually live comfortably on my grad student stipend (own a home, travel fairly often), but I do buy that massive inequality drives resentment and hostility, and frequently begets crime/fraud, etc. It's not good for society. When you can bring up the living conditions of many by reducing the wealth of a few (say from extreme to moderately so), I think that is a worthy end.

What I would like to understand, and invest some reading time in, is how these other countries (Sweden, Australia, etc) achieve their standards of living, wealth distributions, etc. Some Europeans have told me that they consider the US far more classist than places like Germany, where you see people of all parts of life mixing in a beer garden, etc. But, they don't have the mixture of cultures that we do, and I think a big unspoken part of this is that it's still true that race determines class to a large extent.

Anyway, I'm surprised that you are somewhat defensive about this. I was looking for a more playful "what if" discussion. Pretend you can play god - would you reduce the United Health CEO's salary and give working parents at minimum wage a raise? I would.
10-09-2010 12:02 PM
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emmiesix Offline
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Post: #7
RE: For discussion: wealth distribution in the US
(10-09-2010 06:45 AM)Owl 69/70/75 Wrote:  Second, there's a big difference between a society where some people are poor now but there is great potential for upward mobility, versus one where the poor are locked into being poor. In the last 50 years I believe we've moved increasingly toward the latter. Everything I've seen suggests that. I can think of a couple of reasons. One, the "welfare trap" that imposes over a fairly wide range of incomes ($15,000-50,000 for a family of four in Fairfax County, Virginia, in one study I've seen, varies slightly from place to place) a situation where every dollar of additional income is entirely offset by a dollar lost to a combination of taxes and lost welfare benefits. In effect we impose a 100% tax rate on welfare recipients who go to work, a result that cannot be helpful. Funny thing, I do some volunteer work that inevitably leads me into conversations with welfare recipients; this comes up in conversation from time to time, and when it does the universal reaction that I get is, "You understand. I've never talked to anybody who understands this before." Second, the stuff Ross Perot talked about in the early 1990s, in our rush to become a retail/service economy, one casualty is high-paying blue collar jobs. You simply cannot pay someone as much to deliver pizzas or make burgers as you could pay his or her grandfather to make steel. If we don't want even greater wealth inequality to become a permanent condition, we need to find ways to attract value-added private enterprise back to the US. Right now, we're going the other direction.

Third, I agree totally with George's point. There are two ways to address income inequality--make the rich poorer or make the poor richer. Making the poor richer is better, but that's not the course that the present administration is trying.

To your second point - thanks for your thoughts, this is why I like to come here to discuss things with you guys - something to think about.

To the second - I agree that total wealth of a country or the world is not exactly a zero-sum game when efficiencies are taken into account, but for the most part, I don't know how you can do one without the other. If you tell me plainly that there are obvious ways to move the poor into the middle class while leaving the rich alone, I would be happy with those solutions. But intuitively I have a hard time believing there are such measures.
10-09-2010 12:08 PM
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georgewebb Offline
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Post: #8
RE: For discussion: wealth distribution in the US
(10-09-2010 12:02 PM)emmiesix Wrote:  
(10-09-2010 08:50 AM)georgewebb Wrote:  I sometimes wonder why redistributionists focus so much on money. Friendship and sex are also unequally distributed, and are much bigger determinants of human happiness. If one's goal is really to redistributively legislate our way to happiness, it seems one should start with those areas.
Wow. Spoken as only someone who has enough to live on could. You do realize that being poor is a struggle, right?
By what measure? Compared to not being poor, sure. But by nearly every material baseline I can think of, being poor today is less of a struggle than being middle-class or even rich was hundreds or thousands of years ago. For Pete's sake, we are the first society on earth in which poor people are FAT! Think about that.

(10-09-2010 12:02 PM)emmiesix Wrote:  I don't buy the fallacy that money buys happiness -
Exactly - so why worry so much about how much money other people have? We should worry instead about whether they are free.

(10-09-2010 12:02 PM)emmiesix Wrote:  I actually live comfortably on my grad student stipend (own a home, travel fairly often),
Congratulations -- you live better than a king did not long ago. I guarantee you that it's not because someone decided to redistribute money from kings and dukes to you. It's because a great number of people laid down a foundation of liberty and law, which has made our society so rich that even grad students can be well off.

(10-09-2010 12:02 PM)emmiesix Wrote:  but I do buy that massive inequality drives resentment and hostility, and frequently begets crime/fraud, etc.

FIXED inequality may or may not drive resentment. I'm not sure there is any case in history in which TRANSIENT inequality, when coupled with equality of opportunity, drives resentment. Nor is suppression of resentment the sine qua non of policy.

(10-09-2010 12:02 PM)emmiesix Wrote:  It's not good for society.
Perhaps -- although societies throughout history have put up with fantastic amounts of inequality. At any rate, what's even worse for society is giving government the power to decide who has too little, who has too much, and who needs to sacrifice for whom.

(10-09-2010 12:02 PM)emmiesix Wrote:  When you can bring up the living conditions of many by reducing the wealth of a few (say from extreme to moderately so), I think that is a worthy end.

I respectfully disagree, for two reasons.
(1) It is a false choice. The real way to raise the wealth of the many is emphatically NOT to target the few, but to uphold liberty and the rule of law for all. Confiscating from the few does indeed bring down the few, but doesn't really do much for the many.
(2) Because it doesn't work. If you start with the goal of suppressing the wealthy, you way get an extremely short-lived bonanza for the poor -- like kids diving into Halloween candy. But the guaranteed end result just a decade or so later is the poor will be worse off than if you had left things alone. For a staggeringly clear example, see Argentina. Is that what you want -- a temporary feel-good fix that results in LOWER net living standards in the long run?
[/quote]

(10-09-2010 12:02 PM)emmiesix Wrote:  Some Europeans have told me that they consider the US far more classist than places like Germany, where you see people of all parts of life mixing in a beer garden, etc.
And many people, both Europeans and Americans, find the exact reverse to be true. Anyway, it's probably too vague and too subjective to prove. But I'll stack up Europe's record of openness, opportunity, inclusiveness, egalitarianism, and social mobility against our own any time. And so, I suspect, will the tens of millions of people, and their hundreds of millions of descendants, who for the past half-millenium have been leaving the Old World for the New for those very reasons.

(10-09-2010 12:02 PM)emmiesix Wrote:  ...a big unspoken part of this is that it's still true that race determines class to a large extent.
Which is one reason I am proud to live in the first (and still one of the few) nations on earth that has separated ethnicity from citizenship.

(10-09-2010 12:02 PM)emmiesix Wrote:  Anyway, I'm surprised that you are somewhat defensive about this.
My response wasn't defensive at all. Philosophically, I'm serious: study after study has shown that money has less correlation to life satisfaction than the other two factors I mentioned. Consistently less. So why the obsession with redistributing money? As long as we are advocating the use of government power to decide who has too little of something and who has too much, why not go for the stuff that really matters?

Unless either...
(1) The answer is that, well, it's just too frightening to have the government dictating human activity like that. To which one might say: exactly.

or
(2) The real goal of redistributionist policy is not actually to produce a more equal distribution of happiness, but to simply savor the feeling of mighty power, whether it's actual power to one's self as redistributor-in-chief, or a vicarious satisfaction that such power is entrusted to one's "right-thinking" fellows -- combined with the historically unwarranted confidence that such entrustment would hold up over time. And THAT is downright scary.

(10-09-2010 12:02 PM)emmiesix Wrote:  Pretend you can play god - would you reduce the United Health CEO's salary and give working parents at minimum wage a raise? I would.

But that's the whole point: government is not a god, should not play god, and should not be treated as a god. The soils of Europe are rich with corpses created by people who thought it should be. God (capital G) forbid that we ever elect such people here.
(This post was last modified: 10-09-2010 02:09 PM by georgewebb.)
10-09-2010 01:54 PM
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OptimisticOwl Offline
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Post: #9
RE: For discussion: wealth distribution in the US
(10-09-2010 12:08 PM)emmiesix Wrote:  To the second - I agree that total wealth of a country or the world is not exactly a zero-sum game when efficiencies are taken into account, but for the most part, I don't know how you can do one without the other. If you tell me plainly that there are obvious ways to move the poor into the middle class while leaving the rich alone, I would be happy with those solutions. But intuitively I have a hard time believing there are such measures.

I don't belive you can eliminate the poor, as poor is a relative term. Everybody cannot be middle class or above. In a society in which everybody has a house, a TV, a car, and plenty to eat, there will still be the "poor". They will be the ones with "only" a house, only a car, only a TV, and only enough to eat.

Maybe, I am not sure, you can eliminate poverty. Maybe you can eliminate situations in which people have no house, no food, etc. I am not sure because it does take a little cooperation from the people themselves. They have to be willing to accept what is offered or willing to have it forced on them.

The U.S., I think, is closer to eliminating poverty than most places - our poor are generally much better off than the poor of most countries. The only such country I have much experience with is Mexico. I would much rather be poor here. Maybe that is one reason so many people are coming here illegally. In Mexico, I knew of one family of 8 that lived in a cave and survived off the efforts of one 12 year old boy selling goods on the street.

Suppose you do the social tinkering to force the ideal distibution of income - then what? Maintain it forever and call it Utopia?

Wealth is not a zero-sum game - it is creatable, and those who create it create it not only for themselves but for others. I just watched a program about Ebay. Made a couple of billionaires - and a lot of millionaires and a lot of employment. One seller had quit her job as an attorney, now her Ebay business employs 56. Good thing for those 56 she had a few bucks that hadn't been redistributed so she could afford to take the plunge.

I like free enterprise. I like capitalism. I like having the freedom to rise or fall on my own merits. I accept my friend who is happy with much less. I accept also that I could have had much more money if I had worked differently, but I chose to order my life on other things as well as wealth. I have no regrets. Nor do I have any antipathy toward those who have more, however they got it.
(This post was last modified: 10-09-2010 02:15 PM by OptimisticOwl.)
10-09-2010 02:13 PM
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owl7886 Offline
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Post: #10
RE: For discussion: wealth distribution in the US
What struck me about the study is that there were only 3 distributions given initially. This immediately set the US as an extreme, which biases people against it. People will always select something toward the middle. What if there had been 4 or 5 distributions with the US being the second highest? Would the answers have been the same? And this set the stage for the rest of the survey.
10-10-2010 07:13 AM
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WoodlandsOwl Offline
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Post: #11
RE: For discussion: wealth distribution in the US
How many Trillions has the US Government spent on the "War on Poverty" since the mid 1960's?

And yet the number of people on Food Stamps is at an all time high.

Instead of Government "spreading the wealth around" as the current Community Organizer in Chief is doing, Government should "get the hell out of the way" and stop imposing roadblocks to wealth accumulation and capitalism in general.

November 6, 2012 can't get here fast enough for me. I will be in Lafayette Park outside of the White House with a bottle of Dom Perignon 2000 cheering the fact that the asshat is out of a job.
10-10-2010 07:41 AM
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emmiesix Offline
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Post: #12
RE: For discussion: wealth distribution in the US
(10-10-2010 07:13 AM)owl7886 Wrote:  What struck me about the study is that there were only 3 distributions given initially. This immediately set the US as an extreme, which biases people against it. People will always select something toward the middle. What if there had been 4 or 5 distributions with the US being the second highest? Would the answers have been the same? And this set the stage for the rest of the survey.

I totally agree and this bothered me too.

I haven't had time to read all the replies and think about them, but I will get back here later and continue arguing. :)
10-10-2010 09:21 AM
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tanq_tonic Offline
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Post: #13
RE: For discussion: wealth distribution in the US
What is also left out in the study is the "velocity" or turnover of the various strata.

I seem to remember seeing a whole host of papers two or three years ago showing that the turnover in the various 20 percentile groupings was huge.

Accordingly, the poorest move rapidly upwards, the middle move rapidly either way, and the "rich" move rapidly downward.

Too be honest, if their was a whole host of papers corroborating your citation (there are not, and the papers and studies that I have seen are about equally split on this), *and* corresponding papers showing statis in the classifications I would be worried.

Neither prong is satisfied for me. Sorry.
(This post was last modified: 10-10-2010 09:23 AM by tanq_tonic.)
10-10-2010 09:23 AM
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Owl 69/70/75 Offline
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Post: #14
RE: For discussion: wealth distribution in the US
(10-10-2010 09:23 AM)tanq_tonic Wrote:  What is also left out in the study is the "velocity" or turnover of the various strata.
I seem to remember seeing a whole host of papers two or three years ago showing that the turnover in the various 20 percentile groupings was huge.
Accordingly, the poorest move rapidly upwards, the middle move rapidly either way, and the "rich" move rapidly downward.
Too be honest, if their was a whole host of papers corroborating your citation (there are not, and the papers and studies that I have seen are about equally split on this), *and* corresponding papers showing statis in the classifications I would be worried.
Neither prong is satisfied for me. Sorry.

The methodology is suspect and the underlying research is pretty thin. This is clearly a study meant to support a sound byte along the lines that "even Bush supporters favor Swedish-style income/wealth redistribution." There were a bunch of corners cut to get there. That this paper has apparently been accepted for publication demonstrates, purely and simply, the extent to which bias permeates the "peer review" process.

You asked for opinions, emmie. This is mine.
(This post was last modified: 10-10-2010 02:07 PM by Owl 69/70/75.)
10-10-2010 02:06 PM
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emmiesix Offline
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Post: #15
RE: For discussion: wealth distribution in the US
(10-10-2010 02:06 PM)Owl 69/70/75 Wrote:  \That this paper has apparently been accepted for publication demonstrates, purely and simply, the extent to which bias permeates the "peer review" process.

(slight rant warning)

I do not know much about economics, but I do know about peer review. One thing that irritates me sometimes is that they lay public does not seem to quite get what peer review is. No published article is the final word or "truth" in capital letters - it is a piece of original research which has passed a certain number of bars to be published. If you are a scientist that thinks this paper is crap (and I'm sure there are some), then get off your butt and design a better version, uncover the flaws in this particular study, and take your winnings.

The idea that peer review is some sort of exhaustive study is laughable. It's a minimum condition test, and that is all. You might not like it, but that is the way it is done. And quite honestly, scientists don't have time to nitpick every paper before it's published, or we'd collectively accomplish a tiny percentage of what we do now. Two or three reviewers will NEVER be sufficient to determine if something is the best possible study that could have been done, or interpreted in 100% the most correct way, etc. Instead, if something is worthless, the community ignores it (no cites is a pretty obvious indicator). If it is insightful, it will be used, built upon, cited, etc.

Now as to this particular paper, I agree the methodology seems lacking, and this may ultimately lessen the impact of the study. I don't think it invalidates the result.
10-10-2010 11:04 PM
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Owl 69/70/75 Offline
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Post: #16
RE: For discussion: wealth distribution in the US
(10-10-2010 11:04 PM)emmiesix Wrote:  
(10-10-2010 02:06 PM)Owl 69/70/75 Wrote:  \That this paper has apparently been accepted for publication demonstrates, purely and simply, the extent to which bias permeates the "peer review" process.
(slight rant warning)
I do not know much about economics, but I do know about peer review. One thing that irritates me sometimes is that they lay public does not seem to quite get what peer review is. No published article is the final word or "truth" in capital letters - it is a piece of original research which has passed a certain number of bars to be published. If you are a scientist that thinks this paper is crap (and I'm sure there are some), then get off your butt and design a better version, uncover the flaws in this particular study, and take your winnings.
The idea that peer review is some sort of exhaustive study is laughable. It's a minimum condition test, and that is all. You might not like it, but that is the way it is done. And quite honestly, scientists don't have time to nitpick every paper before it's published, or we'd collectively accomplish a tiny percentage of what we do now. Two or three reviewers will NEVER be sufficient to determine if something is the best possible study that could have been done, or interpreted in 100% the most correct way, etc. Instead, if something is worthless, the community ignores it (no cites is a pretty obvious indicator). If it is insightful, it will be used, built upon, cited, etc.
Now as to this particular paper, I agree the methodology seems lacking, and this may ultimately lessen the impact of the study. I don't think it invalidates the result.

As someone who has published a few peer reviewed articles myself, I know about peer review too.

The peer review process you describe is how it is supposed to work. The process I describe is how it actually works, at least in the social sciences. I'm not familiar with how it works in your field, and perhaps it does work the way you describe in the hard sciences. I would hope so, just as I would like for it to work that way in social sciences.

The referenced article is crap, but it obviously found sympathetic peer reviewers.
10-10-2010 11:24 PM
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Post: #17
RE: For discussion: wealth distribution in the US
(10-10-2010 11:24 PM)Owl 69/70/75 Wrote:  The referenced article is crap, but it obviously found sympathetic peer reviewers.

This paper is not crap. It is simple. It is not going to win the authors a Nobel Prize, and it is not in its current form sufficient even for a dissertation. But I'm glad you pointed it out, emmie, because it is one interesting contribution to the literature on income inequality.

As owl7886 noted, the initial experiment asking respondents to choose among just three hypothetical income distributions could have led to unsound results. A way to test this would have been to have done something along the lines that owl suggested: use four or five hypothetical distributions instead of three, vary how many of those distributions are less equal than in the United States, and report how the conclusions change. Maybe they will. Maybe they won't. We simply do not have enough information to know, and we should rightly be skeptical.

The second experiment, however, seems fine, if not particularly groundbreaking. The authors asked respondents to estimate the actual distribution of wealth in the United States and to indicate their preferred distribution. They find that respondents underestimate wealth inequality in the United States and prefer a more equal distribution than actually exists.

This is consistent with previous studies. It is a variant of the common finding that many people consider themselves "middle class" even when they are not. This is largely because people (quite naturally) compare themselves to their peers -- family, friends, and acquaintances -- who usually have similar levels of income and wealth. Some peers have more; some have less. Thus, they feel middle class. It's true for me: my household earns in the top 3 percent of U.S. households, but most of my friends earn in the same ballpark. So, day to day, I don't feel rich, though I am.

What are the implications for public policy? I don't know. I suppose it would be nice if people had a better idea of these basic facts. I would like to think that they would then be more supportive of the type of policies I like. But even if they are not, I fail to see how a better-educated public is bad.

(10-10-2010 02:06 PM)Owl 69/70/75 Wrote:  This is clearly a study meant to support a sound byte along the lines that "even Bush supporters favor Swedish-style income/wealth redistribution."

So, a pet peeve of mine. Just because a study reaches a conclusion that you do not like does not mean it was designed to reach that conclusion or that the conclusion is wrong. Maybe the authors just reported the results that the data show.

If a New York sportswriter wrote that the Yankees were better than the Red Sox this year because the Yankees' team ERA was lower, I might think he's biased, that team ERA is a poor way to judge team quality, and that his article is crap. His conclusion happens to be correct, however.

Critiques need to be more sophisticated. What are the methodological flaws in the study design? And -- critically -- do they matter? In other words, do we expect that the conclusions would change were the authors to correct the methodological flaws? With respect to this study, I believe the first experiment has problems that very well may alter the conclusions, but the results of the second experiment are unlikely to change, as they do not seem affected by the methodological flaws others have identified.
(This post was last modified: 10-11-2010 12:11 PM by Boston Owl.)
10-11-2010 12:03 PM
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OptimisticOwl Offline
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Post: #18
RE: For discussion: wealth distribution in the US
(10-10-2010 11:04 PM)emmiesix Wrote:  Now as to this particular paper, I agree the methodology seems lacking, and this may ultimately lessen the impact of the study. I don't think it invalidates the result.

This seems odd, for a scientist. They did a flawed srudy but got the right result, I just know it!
10-11-2010 12:06 PM
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ausowl Offline
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RE: For discussion: wealth distribution in the US
Can't make the linky thing work at the moment, but from SA Express review of Robert "gasp" Reich's new book (the article includes, counter points, not included here):

"Soaring unemployment has poured salt into a long-festering economic wound — the widening gap between rich and poor Americans, a trend that has been accompanied by a hollowing out of the middle class.
One unimpeachable view of this wage gap comes from a Federal Reserve report that examined the period leading up to the housing bust and recession and noted that “income became more ‘unequally’ distributed over the 1988-2006 period.”

A more provocative analysis emerges from research co-written by University of California Berkeley economist Emmanuel Saez.

After studying Internal Revenue Service records since 1913, Saez found that the fraction of total income reported by the top 1 percent of tax filers peaked at 23.94 percent in 1928.

Thereafter, income for this elite group fell for decades, only to rise from the 1980s through 2007, when this top strata took in 23.5 percent of all reported income.

Former Clinton administration Labor Secretary Robert Reich, now a public policy professor at UC-Berkeley, argues that working-class incomes have stagnated for so long that ordinary consumers have lost the buying power to help pull the country out of recession."
(This post was last modified: 10-11-2010 01:16 PM by ausowl.)
10-11-2010 01:11 PM
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Owl 69/70/75 Offline
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Post: #20
RE: For discussion: wealth distribution in the US
(10-11-2010 12:03 PM)Boston Owl Wrote:  
(10-10-2010 11:24 PM)Owl 69/70/75 Wrote:  The referenced article is crap, but it obviously found sympathetic peer reviewers.
This paper is not crap. It is simple. It is not going to win the authors a Nobel Prize, and it is not in its current form sufficient even for a dissertation. But I'm glad you pointed it out, emmie, because it is one interesting contribution to the literature on income inequality.
As owl7886 noted, the initial experiment asking respondents to choose among just three hypothetical income distributions could have led to unsound results. A way to test this would have been to have done something along the lines that owl suggested: use four or five hypothetical distributions instead of three, vary how many of those distributions are less equal than in the United States, and report how the conclusions change. Maybe they will. Maybe they won't. We simply do not have enough information to know, and we should rightly be skeptical.
The second experiment, however, seems fine, if not particularly groundbreaking. The authors asked respondents to estimate the actual distribution of wealth in the United States and to indicate their preferred distribution. They find that respondents underestimate wealth inequality in the United States and prefer a more equal distribution than actually exists.
This is consistent with previous studies. It is a variant of the common finding that many people consider themselves "middle class" even when they are not. This is largely because people (quite naturally) compare themselves to their peers -- family, friends, and acquaintances -- who usually have similar levels of income and wealth. Some peers have more; some have less. Thus, they feel middle class. It's true for me: my household earns in the top 3 percent of U.S. households, but most of my friends earn in the same ballpark. So, day to day, I don't feel rich, though I am.
What are the implications for public policy? I don't know. I suppose it would be nice if people had a better idea of these basic facts. I would like to think that they would then be more supportive of the type of policies I like. But even if they are not, I fail to see how a better-educated public is bad.
(10-10-2010 02:06 PM)Owl 69/70/75 Wrote:  This is clearly a study meant to support a sound byte along the lines that "even Bush supporters favor Swedish-style income/wealth redistribution."
So, a pet peeve of mine. Just because a study reaches a conclusion that you do not like does not mean it was designed to reach that conclusion or that the conclusion is wrong. Maybe the authors just reported the results that the data show.
If a New York sportswriter wrote that the Yankees were better than the Red Sox this year because the Yankees' team ERA was lower, I might think he's biased, that team ERA is a poor way to judge team quality, and that his article is crap. His conclusion happens to be correct, however.
Critiques need to be more sophisticated. What are the methodological flaws in the study design? And -- critically -- do they matter? In other words, do we expect that the conclusions would change were the authors to correct the methodological flaws? With respect to this study, I believe the first experiment has problems that very well may alter the conclusions, but the results of the second experiment are unlikely to change, as they do not seem affected by the methodological flaws others have identified.

The study is crap. The methodology is sloppy, the data aren't properly substantiated, and the findings don't necessarily support the conclusions (and absolutely don't support the suggested implications). They fudged the data to get a result. If you can't see that, you're probably not going to accept any explanation why that is obviously the case, so there's really no point debating it.

Nothing this poorly done should ever get through peer review. I will admit that I once approved one that was worse, but that was only because I was given four by the editor and told that he had a contractual obligation to take one of them, and I took the least objectionable one (the one that it took me until the second paragraph to realize that the authors were clueless). The editor and I both agreed that NONE of them deserved publication, but one it had to be, and we both agreed on which one was least bad.

Your question about specific methodological criticisms is valid. That's why I already addressed some of them in a post earlier in the thread. 7886 and tanq supplied some other valid criticisms.

I readily admit that we don't have the whole picture. But from the pieces that we do have, it's pretty clear that some corners were cut to get a result. If you don't see that as an indication that this was undertaken with preconceived notions, then I can't prove that it was. But where there's this much smoke, there's usually a fire.

You may disagree, and that is your right. I'm probably not going to sway you, and you're definitely not going to sway me.
(This post was last modified: 10-11-2010 02:31 PM by Owl 69/70/75.)
10-11-2010 02:21 PM
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