Morning Must-Read: Carter Price: Miscalculating the Wealth of the Rich Reveals Unintended Biases

Carter Price had a nice piece a couple of months ago that it is worth highlighting:

Carter Price: Miscalculating the Wealth of the Rich Reveals Unintended Biases: “In an ambitious effort…

…Philip Armour… Richard Burkhauser… and Jeff Larrimore… estimate… trends in inequality based on… Haig-Simons… income… consumption plus change in net wealth… [and] claim inequality has not been rising over time…. [Unfortunately] their methodological choices bias the results to downplay relative income growth at the top…. >The Haig-Simons measure introduces substantial volatility as well based on changes in the market valuation of assets…. Mark Zuckerberg… [was] one of the poorest people in the world in 2012 because his net worth fell by $4.2 billion…. Haig-Simons… factor[s] out volatility in realized capital [gains]… but… introduces… volatility in the valuation of capital holdings…. Inflation in housing prices during the 2000s… show[s] up as a rising Haig-Simons income… [but] much of this valuation was a bubble…. The authors… include near-cash benefits… a single national housing index… the Dow Jones Industrial Average… for all types of stock income… limitations on details of high-income households…. Each of these methodological choices will artificially bias their estimates toward a lower valuation of income growth at the top of the distribution…