In recent weeks, a major debate has gripped the field of economics, one with significant policy stakes. In one sense, the debate is about the nature and extent of inequality in the US: are the rich really taking more of the pie than ever before? Has their share of income been growing very fast, or gradually? Is inequality the defining challenge of our time, or simply one among many?
In another, perhaps more accurate, sense, the debate is about how to interpret IRS audit studies and assign retirement income across time.
Lots of disputes in the social sciences are like this: touching on big, societally important questions, but ultimately turning on disagreements over highly technical issues. And so it is with the great inequality battle of 2023.
On one side are Thomas Piketty, Emmanuel Saez, and Gabriel Zucman, three French-born economists who’ve pioneered the use of tax data in the US and elsewhere to track how the income of rich individuals has grown over time. They are among the most famous and successful people in their field; Piketty’s 2013 book Capital in the Twenty-First Century was a surprise worldwide bestseller, and Saez and Zucman each won the John Bates Clark Medal, an honor that rivals the Nobel in its prestige within the profession.
On the other side are Gerald Auten and David Splinter. Both are well-respected if less publicly known government economists, the former at the Treasury Department and the latter at the Joint Committee on Taxation. The two camps have been arguing over inequality for at least half a decade now, but with the Journal of Political Economy, one of the field’s most prestigious journals, agreeing to publish Auten and Splinter’s latest paper, the debate has come to a head.
The backstory: Piketty, Saez, and Zucman have, in a series of papers going back to 2003, documented a large and ongoing increase in the share of income in the US going to the top 1 percent, and even larger increases in the share going to the top 0.1…
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