Measuring Income and Wealth Inequality (Opinion)

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This topic contains 5 replies, has 6 voices, and was last updated by  daniellesh 3 years, 7 months ago.

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    Consider how surveys were conducted to find out about income and wealth inequality before the Piketty revolution, “randomly chosen households are asked to fill in a questionnaire, and their answers are tallied up to produce a statistical portrait of the whole.” In your opinion, is this way of collecting information about income and wealth inequality still useful today or are tax records the best way of collecting this kind of information? Be sure to look at all of their limitations.


    This is an interesting dilemma, because each of these methods have their drawbacks. On the one hand, “randomly chosen households” aren’t a fully accurate representation of the “whole” unless a very large portion of the population is surveyed. This is an expensive venture, compared to tax records which already exist for use for this purpose. However, with tax records, information is also inaccurate because of fraudulent claims and the like.

    Neither is going to get 100% accurate results, which is why I think the better method is to look at taxes, since they are at least an already-existing option and do not require further funding.



    In my opinion, using tax records is much more effective when trying to collect information of wealth inequality and formulate an accurate picture of the incomes generated within a nation. Tax records, as highlighted in the article, have been in place for a great deal longer than surveys, and therefore we have a greater collection of data that we can study and analyze in an attempt to draw out specific patterns and conclusions regarding individual wealth and wealth inequality. Tax data is also much more accurate than surveys, which are easier to lie on due to their informal nature, and cover the entire populous, not just a randomly selected chunk. While Dana is right in stating that there are inaccuracies with tax data as some members of society file false claims and try to hide income, I believe that the accuracy to taxes does surpass the accuracy of a survey and therefore it would be the most effective way to get the answers economists need. Furthermore we know from the previous use of just surveys that they don’t give us enough information of the top percentage of earners, data that is crucial in determining the wealth gap of a nation and highlighting the inequality between income groups.



    In my opinion, it is important to use all information available to us in order to make a proper conclusion about income inequality. Therefore, I do believe that collecting information via survey is still useful today, as the opportunity cost of not being able to understand how inequality functions within our society is higher than the cost of running surveys. The depth of information that can be obtained via this method is slowly but surely improving thanks to the efforts of groups like the Luxembourg Income Study, and as stated in the article, the information uncovered by Piketty’s tax records cannot replace survey data, but rather gives it crucial and detailed context.



    I think that tax records are a much more accurate method of examining income and wealth inequality. A random assortment of household surveys combined to create a set of data has the potential to be grossly inaccurate because there is no way to determine whether the data set reflects the varying incomes of the population as a whole. As mentioned in the article, it also tends to ignore the incomes of individuals with the greatest percentage of national wealth, greatly skewing the results away from the true extent of inequality. Although it is still useful to look at this surveyed data, I think it is important to combine it with more concrete tax data in order to paint a more accurate picture of society. Tax data also reaches further back than survey results, allowing for a more complete analysis of the trends in inequality.



    I agree with everyone above me wit that tax records are the more accurate method for examining income and wealth inequality of the two. Household surveys not only are expensive but they also don’t reflect the whole population. Though random, as Sandra mentioned, they aren’t being sent out to the individuals in the highest tax bracket. Not getting a full picture of the inequality is worse than the potential cheating of taxes.

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