tag:blogger.com,1999:blog-1740670447258719504.comments2024-03-18T06:41:03.841-04:00Facts & other stubborn thingsEvanhttp://www.blogger.com/profile/12259004160963531720noreply@blogger.comBlogger24579125tag:blogger.com,1999:blog-1740670447258719504.post-53296798116406795652015-04-14T15:58:12.281-04:002015-04-14T15:58:12.281-04:00I haven't done a lot of dynamic panel models, ...I haven't done a lot of dynamic panel models, just played around a bit. As with most nearly everything else, Stata has a nice suite of estimators for them, including Arrelano-Bond (but xtdpd seems to be a bit more general since it allows for serially correlated errors, but start with xtabond since it is simpler). That is pretty much the limit of my experience. I guess the thing to do is to try the different ones out (and hope the results are similar). Never before heard of the Kocyx transformation (and googling is not much help: do you mean Koyck?).paul wolfsonhttp://www.tuck.dartmouth.edu/faculty/faculty-directory/paul-j-wolfsonnoreply@blogger.comtag:blogger.com,1999:blog-1740670447258719504.post-82450532443346197152015-04-14T13:50:23.829-04:002015-04-14T13:50:23.829-04:00Piketty's 1980 to 2010 change comes from Kenni...Piketty's 1980 to 2010 change comes from Kennickell, 1989 to 2007. He says in the note that he grabs 1983 from Wolff but he doesn't appear to, but I'm just glancing over all of this. What is not understood about where Piketty gets it from? What do you mean they don't match either source? They look right to me.<br /><br />It's not malpractice. <br /><br />Stop saying that. <br /><br />If you have a disagreement with Piketty to offer, make it. If all you have is that you don't know what Piketty's source is you shouldn't accuse him of malpractice until you do know what Piketty's source is. I have Wolff, Kennickell, and Piketty on my screen right now and I see where his numbers are coming from. I don't know what your confusion on this is.<br /><br />What I don't know is what is the source of the difference between Kennickell and Wolff, but the fact that two researchers came up with somewhat different answers to potentially different questions (are they measuring net worth the same? I don't know) does not mean Piketty is guilty of malpractice.Daniel Kuehnhttp://www.factsandotherstubbornthings.blogspot.comnoreply@blogger.comtag:blogger.com,1999:blog-1740670447258719504.post-22659009177790794402015-04-14T12:19:37.926-04:002015-04-14T12:19:37.926-04:00I mean Pikkety is +3.7 for 1980-2010.I mean Pikkety is +3.7 for 1980-2010.Spektatornoreply@blogger.comtag:blogger.com,1999:blog-1740670447258719504.post-23458530844940265582015-04-14T12:17:46.843-04:002015-04-14T12:17:46.843-04:00Wolffe 1982 to 2006 is +0.8. Piketty 1980 (30.1%) ...Wolffe 1982 to 2006 is +0.8. Piketty 1980 (30.1%) to 2010 (33.8%) is +3.7. Over 4.5X what his source shows, no?<br /><br />Kenickell doesn't go back before 1989, correct? So we can't really compare what he did in 1980 to 2010, only 1990 to 2010. And Kenickell's increase is almost ALL 1992 to 1995, then 1995 to 2010 is actually -0.1, no?<br /><br />SO the real question is this - Where does Pikkety get +3.7 for 1980 to 1990?<br /><br />Clearly not Wolff. While you could say 1992-1995 in Kenickell is an increase it's only between 2 yeas of SCFs. Not entire 30 years P. stretches it out to. Pikkety's results don't match either source. M&M + Auerbach all seem to have a point that this looks like data malpractice.Spektatornoreply@blogger.comtag:blogger.com,1999:blog-1740670447258719504.post-77357115675269636292015-04-14T11:29:49.929-04:002015-04-14T11:29:49.929-04:00I guess I'm not really understanding your conc...I guess I'm not really understanding your concern. Piketty's 1990 to 2010 increase for 1% is 0.9 percentage points, right? A little bigger for 1980 to 2010. These seem broadly in line with the Kennickell numbers and the Wolff numbers. Do you disagree?<br /><br />The big increase in inequality comes relative to the 1970s trough - the growth he shows is much steadier/slower once we get into the 90s. Do you disagree?<br /><br />The real story here is the K-S 1970s trough which cannot be confirmed in the SCF because there is no SCF for those years. That whole K&S vs. S&Z vs. SCF question is the key, not Wolff vs. Kennickell.Daniel Kuehnhttp://www.factsandotherstubbornthings.blogspot.comnoreply@blogger.comtag:blogger.com,1999:blog-1740670447258719504.post-20560272018139752822015-04-14T11:14:51.120-04:002015-04-14T11:14:51.120-04:00It's Piketty and Wolff, not Pikkety and Wolfe....It's Piketty and Wolff, not Pikkety and Wolfe.<br /><br />Let's please unpack "proving Piketty" for a second.<br /><br />So Piketty shows only a 1% increase for the 1% from his synthetic 1990 point to his 2010 point (somewhat bigger for 1980 to 2010, but not real big, so that's certainly in line with the sort of very modest increase Wolff shows for this period, yes. It ought to be since Wolff and Kennickell are using the same data!<br /><br />The steeper increase is in the top 10% (mainly attributable to the 95th to 99th percentile). Wolff shows this. Kennickell shows this. Again, it would be weird if they didn't. For what it's worth S&Z show this too, although K&S don't.<br /><br />So what part of Piketty is supposed to be inconsistent with the broad evidence from the SCF?<br /><br />The biggest open question for me is why the 90s growth for the 1% in Wolff is so much steeper than for Kennickell. I don't know the answer to that question so I don't have a dog in that fight. In any case since that drops around 2000 it all nets out to be about the same change from the SCF. Wolff ≈ Kennickell ≈ Piketty on that. Daniel Kuehnhttp://www.factsandotherstubbornthings.blogspot.comnoreply@blogger.comtag:blogger.com,1999:blog-1740670447258719504.post-74789610256953363302015-04-14T10:57:06.352-04:002015-04-14T10:57:06.352-04:00Kenickell shows only 1 clear increase from 30.2% t...Kenickell shows only 1 clear increase from 30.2% to 34.6% in between 1992 and 1995 (the Clinton Years).<br /><br />But then he has 34.6% in 1995 and 34.5% in 2010. Where's his increase, cause that's actually a slight decrease?<br /><br />Neither of these support: "In any case none of this really changes the fact that the SCF shows inequality increasing."Spektatornoreply@blogger.comtag:blogger.com,1999:blog-1740670447258719504.post-23730478044582906532015-04-14T10:52:17.579-04:002015-04-14T10:52:17.579-04:00What kind of an increase are we talking about? Wol...What kind of an increase are we talking about? Wolfe's Top 1% is 33.8% in 1983 & 34.6% in 2006 (last year before his 2009 # that's a forecast). Are you really saying that a diff. of 0.8% proves Pikkety?<br /><br />Spektatornoreply@blogger.comtag:blogger.com,1999:blog-1740670447258719504.post-78656053371962160392015-04-14T10:43:21.321-04:002015-04-14T10:43:21.321-04:00Hi Paul - thanks so much for these thoughts. I rea...Hi Paul - thanks so much for these thoughts. I really don't have a lot of time series experience, which has been a barrier to thinking about these things. I've followed the lead of a handful of studies on the same topic on the specification which is why I had started out with lagged independent but not dependent variables. I've been reading up more since posting this and your first post is what I've largely come across - I think that hits the nail on the head as far as the specification problem. I'm still using the lagged independent variable specifications to compare to the earlier studies (which will also provide a nice little discussion of the problems with those), but now I'm also using an Arellano-Bond GMM approach with lagged dependent variables. Does that seem reasonable? One of the paper on my topic takes this approach and after thinking about this more I agree it's the right one.<br /><br />I think the multicollinearity issue is right too. That's actually where I started down this road. I came across the Kocyx transformation to deal with the multicollinearity problem but then of course you no sooner find that than you come across the lagged dependent variable bias issues which lead me to Arellano-Bond.<br /><br />I'll check out the granger tests for panel, but does the Arellano-Bond approach seem reasonable?<br /><br />Thanks again so much for these thoughts.Daniel Kuehnhttp://www.factsandotherstubbornthings.blogspot.comnoreply@blogger.comtag:blogger.com,1999:blog-1740670447258719504.post-30098481560065947192015-04-14T10:29:30.192-04:002015-04-14T10:29:30.192-04:00Followup to yesterday's comment:
1) Notice th...Followup to yesterday's comment:<br /><br />1) Notice that an AR(1) is equivalent to an infinite order MA process; however, the coefficients on the MA terms should be declining exponentially if the AR process is stable (i.e., no unit root).<br />2) Are your last 2 lag coefficients about the same magnitude and opposite signs? I suspect that your unemployment rate is very multi-collinear (i.e., lots of positive serial correlation between terms). Although the textbooks say that multicollinearity typically leads to statistically insignificant point estimates, in my experience it often leads to statistically significant estimates of about the same magnitude and opposite signs.paul wolfsonhttp://www.tuck.dartmouth.edu/faculty/faculty-directory/paul-j-wolfsonnoreply@blogger.comtag:blogger.com,1999:blog-1740670447258719504.post-31471376145350957632015-04-14T10:12:47.070-04:002015-04-14T10:12:47.070-04:00I've been trying to figure out why the Wolff a...I've been trying to figure out why the Wolff and Kennickell picture of the 90s differ but I can't find anything obvious and they don't cite each other so it's hard to compare (not surprising since they came out around the same time). It might be vehicles - I think Wolff excludes them and Kennickell includes them - but I'm not 100% sure.<br /><br />In any case none of this really changes the fact that the SCF shows inequality increasing.Daniel Kuehnhttp://www.factsandotherstubbornthings.blogspot.comnoreply@blogger.comtag:blogger.com,1999:blog-1740670447258719504.post-71439258549824348602015-04-14T09:35:12.135-04:002015-04-14T09:35:12.135-04:00OK, so I pulled up Piketty's tables and Kennic...OK, so I pulled up Piketty's tables and Kennickell (2011) to double check my memory of all this. So in case you don't get to Wolff, the reason Piketty switched from Wolff to Kennickell is that Wolff only has a forecast of inequality for 2009, he does not have the data. The whole point of Kennickell (2011) is that he's updating things with the second wave of the 2007 SCF panel, so he does have data on 2009. He finds there is no significant change in the wealth share. Of course, Piketty notes this.<br /><br />Now, on the question of why there's no actual 2009 number in the mix? I suspect he did it because the Kennickell number comes from a 2007-2009 panel and is not a new 2009 sample. In any case we know that, in fact, the 2010 figure does account for changes after the crisis because Piketty is relying on Kennickell's finding that there was no distributional shift from 2007 to 2009 using the panel.<br /><br />You might think he should just throw that 2009 panel number in there. I'd probably be inclined to agree with that. But you really don't have grounds to call this malpractice.Daniel Kuehnhttp://www.factsandotherstubbornthings.blogspot.comnoreply@blogger.comtag:blogger.com,1999:blog-1740670447258719504.post-73218007573876002732015-04-14T09:10:27.032-04:002015-04-14T09:10:27.032-04:00You need to be more specific on Auerbach. I may ve...You need to be more specific on Auerbach. I may very well disagree with him. I thought the AEA presentation was very good, and I glanced through the paper but have not given it a close read.<br /><br />I agree completely with your quote through "thus seems highly stylized". After that I'd have to go back Piketty's data.Daniel Kuehnhttp://www.factsandotherstubbornthings.blogspot.comnoreply@blogger.comtag:blogger.com,1999:blog-1740670447258719504.post-55634623971988807492015-04-14T08:26:57.738-04:002015-04-14T08:26:57.738-04:00"No, this is M&M's account. People ha..."No, this is M&M's account. People have discussed at length why SCF data is better. M&M don't engage that conversation."<br /><br />What you're saying about the SCF is very inconsistent with what Allan Auerbach says about the SCF. And M&M seem to be in complete agreement with Auerbach.<br /><br />"According to the annotations in Piketty’s dataset, these values appear to have been<br />averaged in a way that seems difficult to reconcile with the way in which they are presented in<br />some of the key charts in the book. For instance, an annotation in the dataset implies that the<br />1980 value is the average of the 1983 value in Wolff (1994) and the 1989 value from Kennickell<br />(2009). Likewise, the annotation for the 1990 value implies that it is the average of the 1992,<br />1995, and 1999 values from Kennickell (2001). These averaging schemes yield, respectively,<br />average years of observation of 1986 and 1995. A representation of the values generated by this<br />averaging scheme as point-in-time values for 1980 and 1990 thus seems highly-stylized.<br />Though the disparity between the actual year of observation and the depicted year of<br />observation is smaller than for 1980 and 1990, the same phenomenon also occurs in the most<br />recent data shown by Piketty. His spreadsheet indicates that the average of observations from<br />the years 2001 and 2004 form the observation for the year 2000 in his book. A single value from<br />the year 2007 serves as the most recent 2010 observation. The latter choice creates the<br />impression that the chart includes data after the recent financial crisis, but it does not."Spektatornoreply@blogger.comtag:blogger.com,1999:blog-1740670447258719504.post-39120961760017561872015-04-14T07:56:56.724-04:002015-04-14T07:56:56.724-04:00If you take a look at the other posts I've don...If you take a look at the other posts I've done, I have dug deeper and they really haven't dug all that deep. And their reaction does pretty much amount to this, which was why I shared the abstract.<br /><br />re: "When the Kopczuk and Saez data starts to break from Pikkety's story he just deletes it and goes to the SCF."<br /><br />No, this is M&M's account. People have discussed at length why SCF data is better. M&M don't engage that conversation.<br /><br />re: "And when the SCF doesn't support him either he starts picking and choosing *which* SCF years he wants to include."<br /><br />You think his choice between Wolff and Kennickell is because he likes the Kennickell outcomes better? Do you have a reason for thinking this other than that it's M&M's assertion?<br /><br />Let me guess - you've read M&M but you haven't bothered to actually at least glance through Wolff and Kennickell?<br /><br />I don't mean to be a jerk or anything, but when you come in here talking about what I'm unwilling to do and then you just repeat stuff like this I don't think I'm obligated to just lie down and take it.<br /><br />Take a look at Wolff and Kennickell, and then all I ask is at least try to articulate why I think the M&M treatment of "picking and choosing which SCF years" account is a bad one.Daniel Kuehnhttp://www.factsandotherstubbornthings.blogspot.comnoreply@blogger.comtag:blogger.com,1999:blog-1740670447258719504.post-29729536242829013142015-04-14T01:27:04.996-04:002015-04-14T01:27:04.996-04:00You do yourself a real disservice, Daniel, when yo...You do yourself a real disservice, Daniel, when you make arguments such as these.<br /><br />M&M are fully aware that he's harmonizing different series. YOU just seem unwilling to admit that they've dug deeper into this one than you're comfortable discussing yourself.<br /><br />What M&M point out and what Pikkety's defenders ignore is that he does more than just harmonize data sets through "standard" stats practices. When the Kopczuk and Saez data starts to break from Pikkety's story he just deletes it and goes to the SCF. And when the SCF doesn't support him either he starts picking and choosing *which* SCF years he wants to include. That's not standard social science. That's data malpractice which he doesn't explain either in his footnotes.Spektatornoreply@blogger.comtag:blogger.com,1999:blog-1740670447258719504.post-36370162205791575382015-04-13T11:00:15.745-04:002015-04-13T11:00:15.745-04:00Why are you using a lagged exogenous variable but ...Why are you using a lagged exogenous variable but not a lagged dependent variable (other than that the estimation issues are simpler w/o a lagged dep. var.)? Think about this for a moment. Consider the following situation:<br /><br />1) Your data have been at a long term equilibrium.<br />2) The unemployment rate then increases for one period, thereafter returning to its long term equilibrium value.<br /><br />What happens? <br /><br />- Assuming that there is an immediate (i.e., within period) effect on the dependent variable (Y), it responds right away. <br />- In the second period, when U has returned to normal, is the previous period's increase still having a direct effect on the dependent variable? Or is its effect actually due to Y's no longer being at its long term equilibrium value. In the first case you want a lagged term of U. In the second, what you really need is a lagged term of Y.<br /><br />Look into panel granger causality tests to select an appropriate specification.paul wolfsonhttp://www.tuck.dartmouth.edu/faculty/faculty-directory/paul-j-wolfsonnoreply@blogger.comtag:blogger.com,1999:blog-1740670447258719504.post-12619750400961926702015-03-16T11:02:53.823-04:002015-03-16T11:02:53.823-04:00I should hope this was obvious from about the time...<i>I should hope this was obvious from about the time the words left Aristotle's mouth. In fact I should hope a couple sentences down he notes this and it just doesn't get quoted as much. </i><br /><br />Actually those words never left Aristotle's mouth. That quote is a (rather crude) paraphrase of Aristotle's thought, popularized in a 1979 book by Laurence Peter. http://en.wikiquote.org/wiki/Aristotleo. natenoreply@blogger.comtag:blogger.com,1999:blog-1740670447258719504.post-19983292869329686852015-03-15T20:18:11.960-04:002015-03-15T20:18:11.960-04:00and I bet she still hasn't finished it...
(B...and I bet she still hasn't finished it...<br /><br />(BTW, I agree its a nice picture).robhttps://www.blogger.com/profile/04682517711551179057noreply@blogger.comtag:blogger.com,1999:blog-1740670447258719504.post-88321766267197332692015-03-15T10:30:11.800-04:002015-03-15T10:30:11.800-04:00[I have now mis-posted and deleted this twice. Sor...[I have now mis-posted and deleted this twice. Sorry!]<br /><br />For some of us being fully consistent with some thing Hayek says is not an argument.<br /><br />That there is such a thing as envy and such a thing as fairness and that it is useful to disentangle them is surely correct. That the two are empirically indistinguishable is false and that they are conceptually indistinguishable is ludicrous.<br /><br />Imagine that I am in the 1% and decide that due to a sense of fairness I need to transfer some large proportion of my wealth to those in the bottom 1%. (Someone like Peter Singer thinks such things.) In that instance fairness is doing a lot of work and envy is irrelevant. Many of the folks worried about inequality and fairness are not the poor but the reasonably (often very) well off. That I think Bill Gates is absurdly (unjustifiably) wealthy and that some % of his wealth is fair game for redistribution has zero to do with envy.<br /><br />As a final aside, it is interesting how easy it is to assume that the poor are viscous and the wealthy virtuous.Anonymousnoreply@blogger.comtag:blogger.com,1999:blog-1740670447258719504.post-46908485871029311232015-03-15T10:27:29.481-04:002015-03-15T10:27:29.481-04:00This comment has been removed by the author.Anonymousnoreply@blogger.comtag:blogger.com,1999:blog-1740670447258719504.post-4436301386330678572015-03-15T10:26:32.572-04:002015-03-15T10:26:32.572-04:00This comment has been removed by the author.Anonymousnoreply@blogger.comtag:blogger.com,1999:blog-1740670447258719504.post-90028740612277167532015-03-14T23:28:17.327-04:002015-03-14T23:28:17.327-04:00More fundamentally.
Situation 1: 18 year old of ...More fundamentally. <br /><br />Situation 1: 18 year old of a modest background has (for examples) $150,000 worth of human capital, can't get a job commensurate with his skills. The 99th percentile owns 50% of wealth in society.<br /><br />Situation 2: 18 year old of a modest background has (for examples) $150,000 worth of human capital, can't get a job commensurate with his skills. The 99th percentile owns 90% of wealth in society.<br /><br />This is silly.Ryanhttps://www.blogger.com/profile/18341935691462262579noreply@blogger.comtag:blogger.com,1999:blog-1740670447258719504.post-79549307130997246092015-03-14T23:18:52.509-04:002015-03-14T23:18:52.509-04:00Okay, so this gets at what you said regarding &quo...Okay, so this gets at what you said regarding "opportunities" and "capacities."<br /><br />If it's "capacities," then what you are saying is irrelevant.<br /><br />If it's "opportunities," then all of this is about liquidity constraints? Throw out everything you say about the words "inequality." Replace them with "how big of an issue are liquidity constraints for the young poor to get an education and job commensurate with their capacities?" and "what can public policy do about it?" This very quickly becomes much less grandiose in scope. The answer to the first question is probably, "much less than what most people would prefer to believe." The second has several answers but a pretty big one is just "charter schools."Ryanhttps://www.blogger.com/profile/18341935691462262579noreply@blogger.comtag:blogger.com,1999:blog-1740670447258719504.post-22475836927881640822015-03-14T15:45:16.436-04:002015-03-14T15:45:16.436-04:00I agree inequality matters, but for different reas...I agree inequality matters, but for different reasons. Since the rich consume less of their income than the poor, a rise in inequality causes the savings rate to rise, unless it's offset by rising inventories or debt fueled consumption, neither of which are sustainable and both of which destroy capital. If the savings rate does rise, either consumption must drop, unproductive investment must rise, productive investment must rise, or the savings must be exported. If consumption drops, growth, demand, and unemployment must rise. If unproductive investment increases, it's not sustainable and destroys capital. An increase in productive investment is the ideal scenario, but there are limits to productive investment opportunities in developed countries (by the definition of developed). In the last case of savings being exported, they have to be invested productively and there are usually constraints on the exportation of savings for lots of reasons.<br />http://suvysthoughts.blogspot.com/2015/02/economic-effects-of-income-inequality.htmlSuvy Boyinahttps://www.blogger.com/profile/14498944095362886178noreply@blogger.com