The Human Progress Podcast Myths About American Inequality | John Early | Ep. 55
Nov 15, 2024
John Early, a mathematical economist and co-author of The Myth of American Inequality, challenges common beliefs about U.S. inequality. He explains how measurement errors, omitted transfers, and taxes skew official numbers. Short-term pain versus long-term gains, income mobility over lifetimes, shrinking gender wage gaps, and risks of granular demographic data are all discussed in lively, myth-busting fashion.
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Top Income Shares Are Skewed By Missing Capital Gains
- Missing income types distort top shares: capital gains and employer-paid benefits aren't fully counted.
- Early notes capital gains largely undercount top incomes and employer health/pension contributions are omitted from many Census figures.
Trend In Inequality Reverses When You Count Transfers
- Measuring inequality over time without transfers and taxes gives a rising Gini, but counting them shows stability or slight decline.
- Early finds the Gini has fallen ~3% once transfers and progressive taxes are included.
Income Slices Mislead Because People Move Over Time
- Static cross-sectional slices mislead because people move across income ranks over time.
- Early emphasizes most people's incomes rise across their lifetime; many poor children later escape low quintiles.
