Perhaps the rich are undersurveyed. Have our statistical tools thus become much less reliable guides both to income distribution and for conducting policy? Probably not. Wealthy people’s evasion has been a problem since household surveys were first conducted seriously more than half a century ago, and there is no reliable evidence that the problem has become systematically worse. Moreover, statistical instruments that, in principle, should be harder to falsify -- for example, individual IRS reports -- paint the same picture as household surveys. In the United States, both agree on the extent of rising inequality since the 1980s.
Exaggerated perceptions of wealth disparity do not lie in the arcana of survey techniques or the wiliness of the rich but in a combination of domestic and global factors. As an example, consider the recent revolutions in Tunisia and Egypt, which were blamed on inequality. In fact, in neither country had economic growth slowed or inequality risen in recent years. In the last decade, Egypt’s per capita income grew at the respectable rate of 2.6 percent per year and Tunisia’s grew at 3.4 percent. The growth rate of both countries exceeded that of the eurozone (which was just under one percent) over the same period.
Read Full Article »