This post by Phil Birnbaum on the unfortunate ease with which statistics on income distributions are misinterpreted – often in ways that are profoundly mistaken – is one of the best things that I’ve read on income inequality in quite a while . (HT Francis Stiff) Birnbaum’s post is longer than the usual blog post but, please trust me, it’s well worth reading in full. A slice:
It sure seems like the [New York] Times writer believes the numbers [in a recent Fed report on income distribution] apply to individuals. For instance, he also wrote,
“There is growing evidence that inequality may be weighing on economic growth by keeping money disproportionately in the hands of those who already have so much they are less inclined to spend it.”
The phrase “already have so much” implies the author thinks they’re the same people, doesn’t it? Change the context a bit. “Lottery winners picked up 10 percent higher jackpots in 2013 than 2010, keeping winnings disproportionately in the hands of those who already won so much.”
That would be an absurd thing to say for someone who realizes that the jackpot winners of 2013 are not necessarily the same people as the jackpot winners of 2010.
Speaking of economic inequality: I don’t know if the Grumpy Economist John Cochrane  ever visits Cafe Hayek, but I take this opportunity to plead that he post at his blog – or somewhere – the talk that he gave on Friday at the Hoover Institution conference in honor of Gary Becker. That talk was as witty as it was profound, wise, and important – all greatly so. (Here’s one of my favorite lines from John’s talk; it was a line in a part of his talk explaining some differences between old wealth and new: [I’m going on memory here]: “Mark Zuckerberg wears a hoodie, not a top hat.”)
Edward Conard challenges, in this brief post, Paul Krugman’s recent Bob-Frank-like lament that allegedly so much economic activity is wasteful competition for status . Note, by the way, the tension between Krugman’s claim here and the claim that Birnbaum quotes above from the New York Times‘s reporter. If Krugman is correct that “for many of the rich flaunting is what it’s all about,” then Thomas Piketty’s thesis is weakened. The reason is that spending lavishly and conspicuously reduces the growth and accumulation of capital for the rich that Piketty believes to be a fundamental ‘law’ of capitalism and the heart of the problem with capitalism.
In response to this recent post at the Cafe , Duke economist Ed Tower sent me this related Forbes essay, by Robert Archibald and David Feldman, from 2010 .