The Stash

And The Bates Clark Goes To... [updated]


I missed this over the weekend, but, via Krugman, it looks like Emmanuel Saez of Berkeley has won the John Bates Clark Medal, awarded to the top economist under 40. Saez and his sometime coauthor, Thomas Piketty, have helped revolutionize the way we think about income inequality. Jon Chait wrote about their work back in 2007:

[T]he science of measuring inequality, like most sciences, is subject to complicating details. The traditional method of measuring inequality has been to examine data from the Census Bureau. Unfortunately, census data isn't very good at detecting shifts among the uppermost slice of the very rich, because it has historically grouped high incomes into broad categories--say, over $999,999. So, in the last few years, economists Thomas Piketty of the Ecole Normale Superieure and Emmanuel Saez of the University of California, Berkeley, have started looking instead at tax returns, which have shown explosive income growth among the top 1 percent of tax-filers compared with everyone else. Last spring, they published a paper titled "The Evolution of Top Incomes: A Historical and International Perspective," which offered some startling findings: Since 1980, the share of income accruing to the highest-earning 1 percent of U.S. tax returns doubled, the share of the top one-tenth of 1 percent tripled, and the share of the top one-hundredth of 1 percent quadrupled. Their research was widely quoted in places like The Economist and The Wall Street Journal. Greg Mankiw, a former Bush economist, has called the study "very solid empirical work."

As Krugman says, this is a really big deal. There are a lot of Nobel Prize winners on that list (including Krugman himself), in addition to impressive names like "Summers" and "Levitt."

Update: Peter Orszag has a pretty helpful discussion of Saez's work over at the OMB blog, including this intriguing paragraph:

Emmanuel's work on income inequality has helped to point the way for the Administration in its pledge to rebalance the tax code, with a tax cut going to 95 percent of working Americans while asking those at the very top to contribute more. The inequality that has arisen over the past three decades is not going to go away overnight, and it has been driven by many factors—including a decline in the growth rate of college-educated workers. But where the prior administration used changes in the tax code to exacerbate these trends, this Administration thinks that the tax code should be used to mitigate them because an economy in which all can enjoy success is one that is strong for us all.

It's hard to think of an economist whose academic work is having a more direct effect on public policy these days. (And, no, raising taxes on the wealthy isn't a nudge-ocracy solution. But sometimes you just have to take the shortest path between two points...)

--Noam Scheiber

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