Latest on Reynolds vs. Thoma Inequality Debate

The back-and-forth between Alan Reynolds, senior fellow at the Cato Institute, and Mark Thoma, professor of economics at the University of Oregon, continues at the Cato Unbound site. Alan Reyolds, who has been arguing both at Cato and on the pages of the Wall Street Journal that income inequality has not been rising, posted a narrow response to Mark Thoma’s earlier reply.

The discussion has devolved, since Reynolds complains that the data he cites is being ignored by Thoma et al. Thoma has argued that Reynolds has been cherry-picking information, that some of the information Reynolds’ cites doesn’t necessarily support his conclusions, and that the great preponderance of academic work in this area, using a variety of sources and methodologies, points to increasing rather than decreasing inequality. Reynolds’ last response, “Red Herrings Can Be Interesting,” addresses one complaint made by Thoma, but ignores his larger argument.

Thoma’s latest post, “How Should Changes in Inequality Be Measured and Assessed?,” is a bit discursive, but worth reading if you need to consider this topic in depth. This paragraph sets up his latest comment:

I am pleased to see that Alan Reynolds is finally taking a closer look at some of the evidence that works against his claim that inequality has been stagnant in recent decades, though he predictably dismisses it. I will not convince him the evidence is valid, and he most certainly has not convinced me that it isn’t, so I encourage anyone who is still puzzled about the evidence that profits have been mismeasured and that it matters for assessing changes in inequality in recent years to look at the research and draw their own conclusions. I have no doubt that a fair reading of the evidence will lead to the conclusion that inequality may in fact be worse than we thought which runs opposite of Reynolds’ claims.

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One comment

  1. Alan Reynolds

    I never said inequality hasn’t increased, only that the evidence is quite murky for the period since 1988-89 (but not for 1981-87). Evidence from tax returns is particularly dubious, for complex reasons I’ve addressed in the Wall Street Journal.

    The URL below links to a number of graphs about the data on income distribution. Thoma provided no data and did not address my data. I welcome comments from anyone who wants to talk numbers, rather than to offer opinions about what the numbers should say.

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