There were two economics reports, and you won’t believe what happened next (shocking!)
1. Liberals won’t like this:
Thomas Piketty seems to have fudged or bungled his data on Sweden.
Economists Jesper Roine and Daniel Waldenstrom did the painstaking work of compiling and publishing Swedish wealth data for 37 individual years between 1873 and 2006. Mr. Piketty uses just 15 of the 37 available data points to construct a data series that departs from the original enough to show a small, steady rise in Swedish wealth concentration from the 1980s to the 2010s…
The most questionable choice is Mr. Piketty’s publication of a data point for the 2010s. The source he cites ends in 2006, yet he arbitrarily decided that 2005 and 2006 are a good representation of the 2010s. But the results gainsay this “source”: Mr. Piketty’s measures of wealth concentration for the 2010s are higher than the measures Mr. Roine and Mr. Waldenstrom note for both 2005 and 2006. Mr. Piketty did not document any reason for departing from Mr. Roine and Mr. Waldenstrom’s data in this instance.
Without the fudge factor, Mr. Piketty’s data would have shown Swedish wealth concentration dropping below its levels from the 1990s and 2000s…
Mr. Piketty’s second questionable choice is to ignore 22 of the 37 data points in the source. In his explanation, he states that he (reasonably) wanted to smooth over business cycles by presenting decadal averages. Mr. Piketty writes that, for instance, ” ‘1870’ is computed as the average for years ‘1873-1877’, ‘1910’ as the average ‘1907-1908’, and so on.” But he abandons this method. For most decades, he uses only a single data point instead of taking the average.
And for the decades since 1980, the particular data points he picks are those that best fit his hypothesis that wealth concentration is rising steadily. If he had applied his own method faithfully, he would have shown readers that wealth concentration rose in Sweden from the 1980s to 1990s and then declined in the 2000s.
2. Conservatives won’t like this:
Sweden’s high taxes may be self-sustaining.
…these countries also spend relatively large amounts on the public provision and subsidization of goods that are complementary to working, including child care, elderly care, and transportation. Such policies represent subsidies to the costs of market work, which encourage labor supply and make taxes less distortionary…Furthermore, Scandinavian countries spend heavily on education, which is complementary to long-run labor supply and potentially offsets some of the distortionary effects of taxation…
Both links came via Tyler Cowen at Marginal Revolution, which I haven’t been reading enough lately.
[Image source: 1730 Homann Map of Scandinavia via Wikimedia Commons.
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