Settling the Score on Census Top-Coding of Income Data

In a recent comment on a post about income inequality, Cato fellow Alan Reynolds says Paul Krugman is wrong about the top-coding of Census data and its implications for calculating the share of income received by the top groups. Reynolds starts by quoting Krugman, then follows up with his assertion:

“The [Census] questionnaire is “top-coded”: if the individual interviewed has earnings higher than $999,999, those earnings are recorded simply as $999,999. Since a lot of income growth in the last few decades has taken place among people with multimillion-dollar incomes, the Census data miss an important part of the story.”

[This] came verbatim from a Paul Krugman column last September. It is entirely wrong... The public use data are censored for privacy but incomes well above $1 million are definitely included in the income share attributed to the top quintile and top 5%. Mr. Krugman’s related comment about the Census sample being “limited” was just strange. ...

Paul Krugman emails in response:

Maybe Reynolds would like to talk to the people at CBO. Here's what they say in a discussion of how they put together their income distribution numbers:

Adjusting Income, CBO: The Census Bureau's distributional estimates derive from income reported on the annual March CPS; CBO, however, adjusts those estimates to bring them into line with the income reported to the Internal Revenue Service on tax returns. CBO's adjustments have the biggest impact on high-income households, substantially increasing the income of that group above the levels reported by the Census Bureau. Those adjustments result in part from respondents to the CPS underreporting their income relative to amounts appearing on tax returns and in part from "top-coding" (the Census Bureau's practice of capping incomes in CPS public-use files at specific levels).

It looks as though Reynolds strikes again!

Advantage Krugman (I added the link at the end). He adds that:

The relevant information appears on the first page of a Google search for "top-coding" "income distribution"; funny that Reynolds would accuse me of being in error without even doing the most elementary check.

Update: Krugman has a follow-up response here, "The Chewbacca Defense."

Comments

[wcw]

Reynolds is bad enough at reading census data that his inability to read the footnotes tends to boggle. I continue to be impressed with his persistence in attempting to engage folks here via comments threads (he has continued, yes? I've been out of town), but holy hannah, he wouldn't know a code book if it bit him in the ass.

In re censored income data (aka topcoding), just look at what raising the limits does to the quintiles in the early '90s (click through, there's a chart with an obvious discontinuity). If the data were completely uncensored today, I would expect a similar discontinuity.

Crikey. A mere BA, I am the last person to argue for the necessity of a doctorate to read data files, but Mr. Reynolds' performance makes a strong argument that I am wrong here.

[maria]

I think I posted before much about Reynold's "education" in economics, such as it was. He started as a CPA if I recall Friedman's kindly letter, and then passed through UCLA first and later Sacramento State (near the bottom of the US education hierarchy) where it is not clear exactly what he studied or if he ever got any degrees. I have never seen any degree listed in any CV of his. Close to pathetic. A Cato hack, I would say, who says what it pays him to say. After all chaired professors at Princeton and Berkeley are there for a reason. And people like Reyolds are where they are for a reason too.

[anne]

The problem may be me as well. The reference specialist for government publications told me that though the census category for income was set below $1 million. Income about $1 million were recorded and contained in or implied by the data and subsequent analysis. This would make the analysis Saez and Piketty more accurate than otherwise. So, Paul Krugman, was right to rely on Piketty and Saez but the note was confusing.

Now, I think I was right, but I am sure Alan Reynolds is wrong in arguing with Saez and Piketty in any case. Am I wrong?

[anne]

Remember, the analysis of David Cay Johnston in concentration of corporate share ownership was also called to question because Johnston uses Internal Revenue Service data which does not reflect information on shares held in tax sheltered accounts. Nonetheless, simply understanding investment portfolios will tell us that the IRS data reflects strongly share ownership. That 1% of households control 57.5% of corporate shares, as reflected in IRS data, is all too reliable an estimate.

[anne]

Again, what Paul Krugman is arguing, and I agree completely, is that Congressional Budget Office analysis is not distorted by the top-coding of census data, nor is associated income tax data analysis distorted. Similarly the Saez and Piketty supporting analysis of David Cay Johnston stands.

http://krugman.page.nytimes.com/b/a/258010.htm

September 19, 2006

On Tracking Inequality
By Paul Krugman

[Alan Reynolds]

It is now obvious that nobody, including Krugman or Saez, is even implying that anything I wrote about the misuse of Piketty-Saez data is wrong. So we can now stop saying the top 1% received 8% of "income" in 1980 and 16% in 2004, right?

On the Census, I simply repeated what anne and Heldman had said before -- that Krugman (they thought it was me) is mistaken about top coding. Like others, he now changes the topic to the CBO. Unfortunately, their "Appendix F" does not really address what he wrote, which was that top-coding meant the Census did not count any incomes above $1 million in the top 5%. That's still wrong. Of course Census does not include capital gains in their basic series, which is the CBO's main point, but the Census has 14 other series that do (incorrectly, for reasons that Piketty and Saez partly explain).

On the CBO, the problems with that series are dealt with in my book and the forthcoming Cato essay and a WEA paper, eventually. Because the CBO includes taxable capital gains (totally excluding most of your capital gains and mine, which are in a house an IRA and a 403(b)plan), the data are demonstrably sensitive to stock prices, but also to changes in capital gains tax rates. The CBO also includes interest on tax-exempt bonds, but that was not reported on tax returns until 1987. They may or may not estimate that income before 1987, but there is definitely a break in the series. Once again, my main point is that we cannot properly use these data before and after the 1986 tax reform, just as we cannot use Census data before and after the 1993 change in survey methods. You can do that, but not with any integrity.

So,we all now agree that the flaws I revealed in Piketty and Saez are now beyond dispute (I'm right) and we should now move on the similar but differnt flaws in the CBO data. Unless, of course, everyone would rather chat about the quality of a night school I attended in 1967.

[wcw]

'Tain't Sac State, Mr. Reynolds. A good friend of mine got his engineering degree there, and has a career track record of accomplishment that many an MIT grad might envy.

No, we critics remain exercised because you can look at the data (take the census quintiles, despite their flaws, to a chart of which I link) and yet write things like, "there is no clear evidence of a sustained and significant increase in inequality since 1988."

As I put it in comments before, our complaint is with your "asserting, repeatedly, loudly and with great satisfaction, that the sky is green."

Now, I gather from your comments that you believe that the break in the census data in the early '90s somehow changes the long-term story. Your naked assertions as at that comment are underwhelming. Please post your regression specifications and tables here -- I am intrigued to see how someone might cherrypick away the obvious.

Best of luck.

[anne]

There's glory for you!'

`I don't know what you mean by "glory,"' Alice said.

Humpty Dumpty smiled contemptuously. `Of course you don't -- till I tell you. I meant "there's a nice knock-down argument for you!"'

`But "glory" doesn't mean "a nice knock-down argument,"' Alice objected.

`When _I_ use a word,' Humpty Dumpty said in rather a scornful tone, `it means just what I choose it to mean -- neither more nor less.'

`The question is,' said Alice, `whether you CAN make words mean so many different things.'

`The question is,' said Humpty Dumpty, `which is to be master - - that's all.'

Alice was too much puzzled to say anything, so after a minute Humpty Dumpty began again. `They've a temper, some of them -- particularly verbs, they're the proudest -- adjectives you can do anything with, but not verbs -- however, _I_ can manage the whole of them! Impenetrability! That's what _I_ say!'

`Would you tell me, please,' said Alice `what that means?`

`Now you talk like a reasonable child,' said Humpty Dumpty, looking very much pleased. `I meant by "impenetrability" that we've had enough of that subject, and it would be just as well if you'd mention what you mean to do next, as I suppose you don't mean to stop here all the rest of your life.'

`That's a great deal to make one word mean,' Alice said in a thoughtful tone.

`When I make a word do a lot of work like that,' said Humpty Dumpty, `I always pay it extra.'

`Oh!' said Alice.

[howard]

it remains obvious that alan reynolds, who accuses people who disagree with him of having a psychological problem, is a propagandist and not an analyst.

for instance, paul krugman has provided us a CBO discussion that references how the Census Bureau behaves. reynolds pretends that it doesn't.

i understand that's good enough to be published in the wsj, where reynolds is right at home, but it's not good enough for reality.

[maria]

Just for the record, Mr. Reynolds, did you ever get a degree from any school you attended? If so please tell us.

[JR]

The Cato Institute's website lists ten "senior fellows" (it has no ordinary fellows, only "seniors.") The biographies of seven specify a Ph.D. and give the school and the field of study. The biography of an eighth shows a JD and an LLM and gives the schools. Two bios - those for Alan Reynolds and for one Jerry Taylor, who specializes in opposing environmental protection - have no degrees. This is reasonably strong evidence that Reynolds is not an economist, even though he plays one on TV.

says...

Krugman "if the individual interviewed has earnings higher than $999,999, those earnings are recorded simply as $999,999."

Reynolds restating what he claims Krugman said "top-coding meant the Census did not count any incomes above $1 million in the top 5%."

I dropped out of college before completing my Chemistry degree and even I know these two statements don't say the same thing.

[Bruce Webb]

It must be hell to be Alan Reynolds going into the New Year. Days ago nobody cared about your CV and you had a perfectly good gig. But you just HAD to take on Prof. K.

Good luck. And write when you get work. (BTW all the best and brightest Right Econ guys suggest that the key to better incomes is more education. Try getting a degree and getting back to us.)

[Alan Reynolds]

Mr. Krugman wrote that Census Bureau data was inferior to Statistics of Income tax data used by Piketty and Saez and the CBO because the Census sample is limited. Unless he imagined the SOI sample included every tax return (was unlimited), the complaint about samples being limited made no sense at all.

Krguman also wrote that because of top-coding the Census Bureau records all income above a million dollars as if it was a million dollars. The CBO source he found on Google does not say that, of course, because it is not true.

Top-coding is a problem for researchers who use the March current population survey, because they cannot peer inside the top 5% to see, for example, how much is earned by the top one-hundreth of one percent.
Because a very high income might be used to identify an individual, the Census strips out such information (as well as addresses) before releasing public use files to the rest of us. But the Census Bureau uses confidential, restricted-access microdata, not public use files, when calculating income shares of households and families by quintile and smaller fractiles.

A December 18 post from Herderman (whose name I once misspelled) said, “Whoever wrote this is absolutely wrong on how the Census handles topcoding information. If you are working with aggregate data such as the total amount of income above the topcoded amount, then the Census does report the aggregate amount as accurately as they can. The Census questionaire is NOT topcoded and neither is the data in the CPS. Topcoding is a construct for confidentiality but does not lessen the aggregate amount of reported income.”

Nobody answered that Herderman was wrong about that, because Anne thought Krugman’s statement about top-coding came from me. Yet I am now said to be wrong from saying the same thing simply because the comment Herderman correctly debunked came from Krugman.

Researchers with rare “special sworn status” used their access to confidential Census data in a November 20 paper, “Using the P90/P10 Ratio to Measure Inequality Trends with the Current Population Survey: A View from Inside the Census Bureau Vaults” (November 20, 2006) by Richard V. Burkhauser of Cornell University, Shuaizhang Feng of the Shanghai University of Finance and Economics and Stephen P. Jenkins of the University of Essex.

Using Gini coefficients, as well as narrower ratios of income in the top 10% to income in the bottom 10% (which exclude 80% of households), they found “there is no overall trend in the P90/P10 ratios during the period 1975-2004,” and “there is no change in levels for either the Gini or P90/P10 ratio in the post-1992 period.”

Using a variety of Census, Fed and CBO data, I find no “significant and sustained” (post-2000 boom) change in inequality since 1988. Burhkauser, Feng and Jenkins find no significant change in the inequality of household income of wages of full-time employees since 1975 by one measure, or since 1992 by another.

Like my still-unanwered critique of the Piketty-Saez estimates, the findings of Burkhauser et. al. may irritate people who prefer to put their faith in someone else’s credentials rather than to even bother figuring out what limited samples and top-coding mean.

[Killer]

Reynolds: "Krguman also wrote that because of top-coding the Census Bureau records all income above a million dollars as if it was a million dollars. The CBO source he found on Google does not say that, of course, because it is not true. "

Sorry dude, but your accuracy at restating other peoples' comments isn't too high. How about direct quotes?

says...

Like this:
Krugman: “The [Census] questionnaire is “top-coded”: if the individual interviewed has earnings higher than $999,999, those earnings are recorded simply as $999,999."

Oops! the quote refers to the census questionnare, and nothing else.

[Movie Guy]

For those who are having difficulty tracking this blog post, it might help if you read the following three blog posts and comment threads. Note as well that the following blog posts have dropped off of the current main page of the blog (accessible via the archives and category links on the right side of the blog). As is obvious in the above blog post, Mark Thoma did not further identify the recent comment from Alan Reynolds with a sublink reference, so some may have difficulty pulling the pieces together.

Here is the rest of the picture:

Reynolds' Rap on Inequality
December 16, 2006 at 12:15 AM
Economist's View blog

Follow-Up on Inequality
December 16, 2006 at 11:11 AM
Economist's View blog

Follow-Up on Inequality II
December 17, 2006 at 12:45 AM
Economist's View blog

Until Reynolds made his follow up post on December 30, 2006, further challenging the Krugman assertion, no one including Thoma and apparently Krugman had challenged the original claim by comment poster Herderman nor anne who reposted them under the comments sections of two separate blog posts though falsely claiming that Reynolds had made the Krugman assertion. Herderman made the original claim on Dec 18, 2006 at 9:23:32 AM on the second follow up blog post (third blog post above). Reynolds further challenged Krugman's assertion on December 30, 2006 at 8:21:48 AM on the first follow up blog post (second post above). Now, the challenge is against Reynolds, not Herderman nor anne (who thanked Herderman on December 18, 2006 at 11:16:58 AM and repeated Herderman's claim in the comments section of two blog posts as false putdown slaps targeted to Reynolds). Using Herderman's post, anne's shots at Reynolds were posted on December 18 at 11:27:59 AM (second blog post above) and December 18 at 11:31:03 AM (third blog post above).

Herderman's and anne's comment posts have not been mentioned by Thoma in this blog post nor the three blog posts identified above.

For twelve days, no one including Thoma and Krugman publicly challenged (on this blog) Herderman's December 18 claim that Krugman was wrong in his original statement. That challenge could have been put forth in a blog post or the comments sections of any of the three previous blog posts listed above on any of the twelve days concerned.

[Movie Guy]

Alan Reynolds recently posted two comment posts under two of the previous blog posts cited above. Those comment posts were posted on December 28, 2006 at 7:43:17 AM and December 30, 2006 at 8:21:48 AM.

The first follow up post:

Follow-Up on Inequality II
December 17, 2006 at 12:45 AM

Reynolds is responding to this post:

evagrius | Dec 20, 2006 9:28:20 AM - "I'd would like to know Mr. Reynold's explanation for the increase in Food Stamps recipients over the last five years. Is there any correlation between the rise in Food Stamp recipients and lowered income?"

"It seems that no one is interested in these "locals", only in excusing the global income of the top 1%."

Posted by: Alan Reynolds | Dec 28, 2006 7:43:17 AM:

Full text of Reynolds' comment post:

"Recall that the discussion until now was about upper-tail inequality -- namely, the top 1%. The introduction to my book deplores that recent tendency, because it detract attention from poverty issues. Besides, poverty doesn't have to increase to be a problem worth studying.

An increase in food stamp receipients that exceeded the general increase in the population might be an indicator of increased poverty, but only if the elligibility criteria never changed. Some programs, particulalry Medicaid, have become available in many states to people with higher incomes than before.

I'm not sure if that is also true of food stamps or not. But the number of food stamp recipients is certainly a very roundabout method of meausuring inequality, compared to the Census Bureau's Gini coefficients for broadly-defined income (including such transfer payments and subtracting taxes). Those Ginis haven't changed since 1988, aside from a statistical glitch in 1993.

There is no point assuming that I hold positions on immigration or anything else when Googling my name and nearly any topic will tell you exactly what I have written.

I am pro-immigration, but opposed to U.S. methods of rationing entry by the queue, political preference and lotteries. Adding millions of poor immigrants surely increases the number of poor people, at least for a while, but that doesn't prove the immigrants (and natives) are not better-off. Robert Lerman and the Urban Institute is very good on this topic, among others."

-----

The second follow up post:

Follow-Up on Inequality
December 16, 2006 at 11:11 AM

Posted by: Alan Reynolds | Dec 30, 2006 8:21:48 AM:

Full text of Reynolds' comment post:

"Time for another look at the top of this page:

1. “The Census data he [Alan Reynolds] uses in rebuttal is a sample too. . . . Tax-returns are used because it provides a homogeneous series over time, Census data do not.”

I simply divided by personal income – from BEA not Census -- rather than income less transfer payments reported on individual tax returns. Personal income is far more homogenous over time than adjusted gross income, which changes with changes in the tax law.

2. “It's not at all clear to me that we should be using after-tax and after-transfer income. . . . Because capital gains are volatile and mainly reflect swings in the stock market, some experts prefer the Census Bureau data. That showed the richest families' share of total income in 2004 equaled its previous high and rose to a new high in 2005.”

I did not use after-tax income. But if transfer payments are not income then what are they? And why does the IRS tax them as income? The old EPI comment linked in this context is dealt with in my Chapter 2 of my book, but it is entirely irrelevant to what I wrote back then and to my Journal article. Jared Bernstein at EPI has not argued that my critique of Piketty-Saez is wrong, but instead alludes to an alternative series from CBO which I also critique at length in the book and in a cato.org paper due out soon

There is a break in the Census series in 1993 which makes previous data incomparable (the EPI is clear about that). Aside from that statistical glitch, the share of pretax, pretransfer income going to the top 5% of households has been essentially flat since 1988. "Equalled its previous high" is not proof of an upward trend. Actually, the top 5 percent's share was 22.2% in 2005 and 22.4% in 2001. For families, the share was 21.1% in 2005 -- the same as in 2000. Census has 14 other income series which count taxable capital gains (and therefore gyrate with changes in the market and the tax on gains) but also add transfers and subtract capital gains. The show less inequality, of course, and the latest 2002-2004 Gini coefficients based on broad income are no higher than they were in the late 1980s.

4.“The [Census] questionnaire is “top-coded”: if the individual interviewed has earnings higher than $999,999, those earnings are recorded simply as $999,999. Since a lot of income growth in the last few decades has taken place among people with multimillion-dollar incomes, the Census data miss an important part of the story.”

Ironically, two blog posters attributed this quote to me, though another noted that it actually came verbatim from a Paul Krugman column last September. It is entirely wrong, which must be why the remark was attributed to me. The public use data are censored for privacy but incomes well above $1 million are definitely included in the income share attributed to the top quintile and top 5%. Mr. Krugman’s related comment about the Census sample being “limited” was just strange. The tax return data comes from a sample of more than 100,000 returns, but that too is certainly a limited number. All samples are limited.

Other comments showing that Piketty and Saez are aware of the limitations of their data are scarcely an answer to my op ed or book. After all, I quoted Saez several times in the Journal article and cited his research on the elasticity of taxable income. I once emailed to Mr. Saez that "I'm not saying anything you haven't said yourself." I simply illustrated some of the problems with statistics (which nobody has challenged), to show these are not minor details."

[Movie Guy]

Here are Krugman's original remarks:

On Tracking Inequality, by Paul Krugman, Money Talks, NYTimes (subscription required)

Mark Thoma cited the Krugman piece in this September main post: Economist's View - "Krugman: On Tracking Inequality", September 19, 2006; this post is not identified under the EV blog category of Income Distribution, rather it tab identified as "Posted by Mark Thoma on September 19, 2006 at 12:33 PM in Economics, Press | Permalink".

Thoma again cited the Krugman piece, referring to the September blog post, in the second of three income inequality posts referencing Alan Reynolds' Wall Street Journal op-ed piece, EV - Follow-Up on Inequality, December 16, 2006, which challenges Alan Reynolds, saying:

"Much of his rebuttal uses Census data. But there is a problem here: (Mark refers to his September 19, 2006 main post which includes an excerpt from Paul Krugman original NYTimes Money Talks piece, On Tracking Inequality and he pulls part of the Krugman text forward.)

Let's review the original NYTimes Money Talks text excerpt, accompanied by Mark's lead in on September 19, 2006:

Mark Thoma: "Paul Krugman tries to clear up some confusion over measuring inequality, and institutes a new practice - posting links to the data sources in his columns. He hopes other commentators will do the same thing and save us all a lot of time chasing down sources behind arguments:"

On Tracking Inequality, by Paul Krugman, Money Talks: "Now that rising income inequality has become a big political issue, people are throwing around a lot of numbers. Some of these numbers are reliable, other aren’t. But how are readers to tell the difference?"

"Well, one thing that might help is knowing where the standard sources are."

"The first point of call is data from the Census. Census numbers are based on the Current Population Survey, a questionnaire filled out by a sample of Americans, then extrapolated to the nation as a whole. For historical comparisons, go to Historical Income Tables."

"Data there are gathered under several categories: households (people living together), families (they have to be related), and individuals. (Formal definitions) As of now, only the household data have been updated to 2005, which is why I recently turned to Table H-13 – Educational Attainment of Householder – to show that most Americans with a college education have lost ground in recent years."

"The Census data are the key source for assessing how most Americans are doing. However, they do a poor job of tracking incomes at the very top, for two reasons. First, because Census data are based on a limited sample, not the whole population, they’re unreliable in tracking the income of small groups – and the really rich are a small group, who just happen to bulk large in the economy. Second, the questionnaire is “top-coded”: if the individual interviewed has earnings higher than $999,999, those earnings are recorded simply as $999,999. Since a lot of income growth in the last few decades has taken place among people with multimillion-dollar incomes, the Census data miss an important part of the story. In particular, what you won’t learn from Census data is the extent to which rising inequality is a story, not about the top 20 or even the top five percent of the population, but about the top one and the top 0.1 percent."

"Fortunately, there’s another source of information: income tax returns, which aren’t top-coded. Tax return data are especially useful if you want to look at long-term trends going back before 1947, which is when the Current Population Survey data begin; high-income Americans have been paying income taxes since 1913. The I.R.S. does its own analyses of these data, and the Congressional Budget Office produces reports based on a merge of Census and I.R.S. data, but the most convenient and comprehensive analyses come from Thomas Piketty, at the Ecole Normal Superior in Paris, and Emmanuel Saez at UC Berkeley. Their latest data set is at Prof. Saez’s Berkeley home page (Excel file.)"

"There are other sources, too – which I’ll explain when I use them. You see, I’ve decided to institute a new policy. On inequality, and in fact on many matters economic, it’s all too common to have numbers – some from unknown sources – flying in all directions. The issues are hard enough without clarity about where numbers come from. So from now on I’m going to post sources for the numbers in each column on TimesSelect, with links where possible (it usually is.) Basically, this is the same thing I do when filing my columns; I always provide sources and links to my copy editors. But now I guess my explanations will have to be grammatical! Anyway, I hope that other economic commentators will follow the same practice, which is easy in this Internet age, and will save all of us a lot of confusion."

[Movie Guy]

My research of the Census Bureau information and methodology confirms Herderman's original position that Krugman's statement is wrong.

Krugman's dodgeball game of citing the CBO appendix reference doesn't change the fact that his statement is bogus. The public product output data is top-coded during subsequent stages or steps as explained in Census Bureau guidance in many ways (see SIPP as an example), but I find no evidence that interview data isn't collected as stated originally by participants with regard to income sources and amounts.

[Mark Thoma]

I don't fully agree with Movie Guy's characterization of the debate.

I don't have time to go through it all, and certainly don't have time for the barrage that would follow should I so much as hint at engaging with MG's points, so I will leave it at that.

Don't get misdirected by arguing over all this minutiae they are throwing out. It's the typical try to cloud the picture, to obfuscate the results they don't like. Think about how the right has attacked any science they don't agree with in an attempt to make the public believe there is controversy in the scientific community where virtually none exists. This is no different.

The real debate is whether inequality is increasing. Reynolds says no, just about everyone else says it is, including others on the right. That is not a left-right conclusion.

Krugman is clearly right according to the weight of the evidence - inequality is increasing, and Reynolds is wrong. If MG wants to try to defend the idea that inequality is not increasing - Reynolds point - all I can say is good luck. There is a vast difference between peer-reviewed journal articles and assertions in an op-ed. I'll be waiting for your journal article that rebuts the previous results because if in fact you can overturn Piketty and Saez, that would land in a top flight journal. I promise to post it when it comes out.

Mark Thoma

[Movie Guy]

maria and Bruce Webb, (and anyone else)

Alan Reynolds answered the personal higher education question on the morning of December 18, 2006 on one of the three previous related threads. That comment post has been sitting right there for twelve days for anyone to read.

Moreover, here are some facts regarding California State University, Sacramento (Sacramento State):

Sacramento State offers 60 undergraduate degrees and 40 graduate degrees, as well as two joint doctorates.

Sacramento State total student enrollment - 28,529

Sacramento State student to faculty ratio - 21 to 1, and more than 70 percent of classes have fewer than 30 students. About 80 percent of Sacramento State's full-time faculty hold a doctorate.

Sacramento State undergraduate enrollment - 23,156

Sacramento State graduate enrollment - 4,914

Sacramento State's college freshmen are drawn from the top third of their high school classes. Large numbers of transfer students come from two-year colleges, and there are also about 750 international students from 80 nations.

Sacramento State, in cooperation with UC Santa Barbara, has one of only 10 public history doctorate programs in the nation.

Sacramento State's criminal justice program is the largest one west of the Mississippi.

Sacramento State has the largest cooperative education program in California.

Sacramento State offers 60 undergraduate degrees and 40 graduate degrees, as well as two joint doctorates.

Following is a partial listing of the master's programs offered at Sacramento State.

ANTHROPOLOGY: MA
ART: MA
BIOLOGICAL SCIENCES: MS Option: Biological Conservation, Molecular and Cellular Biology
BUSINESS ADMINISTRATION: MBA Options: Executive MBA, Finance, Human Resources Management, Management Computer Applications, Marketing, Urban Land Development
BUSINESS ADMINISTRATION: MSBA
Options: Accountancy, Management Information Systems, Taxation
CHEMISTRY: MS
CIVIL ENGINEERING: MS
COMMUNICATION STUDIES: MA
COMPUTER ENGINEERING: MS
COMPUTER SCIENCE: MS
COUNSELING: MS Options: Career Counseling, School Counseling, Vocational Rehabilitation Counseling, Community Counseling, School Psychology, Marriage, Family and Child Counseling
CRIMINAL JUSTICE: MS
ECONOMICS: MA
EDUCATION LEADERSHIP: ED.D EDUCATION: MA
Options: Behavioral Science (Gender Equity Studies), Child Development Option – Emphasis in Applied Settings, Child Development Option – Emphasis in Theory Research, Curriculum and Instruction, Educational Leadership, Educational
Technology, Higher Education Leadership, Language and Literacy, Special Education, Teacher Leadership in Multicultural Education
ELECTRICAL AND ELECTRONIC ENGINEERING: MS
ENGLISH: MA Concentrations: Creative Writing, Literature, Pedagogy
GEOLOGY: MS
GOVERNMENT: MA
HISTORY: MA Options: Public History, Humanities
INTERNATIONAL AFFAIRS: MA
KINESIOLOGY: MS Concentrations: Exercise Science, Sport Performance
LIBERAL ARTS: MA
MARINE SCIENCES: MS
MATHEMATICS: MA
MECHANICAL ENGINEERING: MS
MUSIC: MM Options: Conducting, Composition, Music Education, Music History and Literature, Performance
NURSING: MS Option: Family Nurse Practitioner
PHYSICAL THERAPY: MPT
PSYCHOLOGY: MA
Options: Counseling Psychology, Industrial Organizational Psychology
PUBLIC HISTORY: PH.D.
PUBLIC POLICY AND ADMINISTRATION: MPPA
RECREATION ADMINISTRATION: MS
SOCIAL WORK: MSW
SOCIOLOGY: MA SOFTWARE ENGINEERING: MS
SPANISH: MA
SPECIAL MAJOR: MA, MS
SPEECH PATHOLOGY: MS Options: Speech Pathology
TEACHING ENGLISH TO SPEAKERS OF OTHER LANGUAGES: MA.
THEATRE: MA

[maria]

MG instead of listing lots of the Sacramento State catalog, why not just tell us what his degrees are? I missed it if he told us. You say he did. What are they? Or did he get a degree in everything taught by SacState? LOL

[maria]

I think one needs to revisit the letter from Friedman that Reynolds so proudly displayed. Friedman is very pleasant and says Reynolds, he thinks, has a point. But he then contradicts Reynolds in what is important by saying that he thinks inequality has increased. Perhaps Reynolds should have blacked out that part of the letter. LOL.

[maria]

MG sometimes I wonder what the point of your exhaustive posts is. Do you just like to fill space with information that is basically irrelevant to the discussion? How much time do you spend typing out these seemingly endless posts?

[maria]

MG---do you have some kind of "regurgitation software" that allows you to post these super long messages with just a few keystrokes. I ask since I can't imagine doing it without something like that. And if you do, can you tell me what it is. I think it might be useful.LOL

[Movie Guy]

maria,

If you're too lazy to go read the post, that's your problem. You raised all the hell about his background and threw up some pretty trashy, elitist posts in the process.

That you were too lazy to determine if Reynolds had responded since December 17, 2006 prior to hounding him again on the same issue on this December 30 blog post thread speaks for itself.

This matter reflects on one's character and attitude.

[maria]

I see you still don't care to tell what his degrees are. Why the reluctance?

And, by the way, here is something for you to ponder:

President Harrison has the dual distinction among all the Presidents of giving the longest inaugural speech and of serving the shortest term of office. Known to the public as "Old Tippecanoe," the former general of the Indian campaigns delivered an hour-and-forty-five-minute speech in a snowstorm. The oath of office was administered on the East Portico of the Capitol by Chief Justice Roger Taney. The 68-year-old President stood outside for the entire proceeding, greeted crowds of well-wishers at the White House later that day, and attended several celebrations that evening. One month later he died of pneumonia.
**********************************
Length does not = truth. And don't write your posts in a snowstorm. LOL

[Movie Guy]

MThoma - "I don't fully agree with Movie Guy's characterization of the debate."

"Don't get misdirected by arguing over all this minutiae they are throwing out. It's the typical try to cloud the picture, to obfuscate the results they don't like. Think about how the right has attacked any science they don't agree with in an attempt to make the public believe there is controversy in the scientific community where virtually none exists. This is no different."

"I don't have time to go through it all, and certainly don't have time for the barrage that would follow should I so much as hint at engaging with MG's points, so I will leave it at that."

"The real debate is whether inequality is increasing. Reynolds says no, just about everyone else says it is, including others on the right. That is not a left-right conclusion."

"Krugman is clearly right according to the weight of the evidence - inequality is increasing, and Reynolds is wrong. If MG wants to try to defend the idea that inequality is not increasing - Reynolds point - all I can say is good luck. There is a vast difference between peer-reviewed journal articles and assertions in an op-ed. I'll be waiting for your journal article that rebuts the previous results because if in fact you can overturn Piketty and Saez, that would land in a top flight journal. I promise to post it when it comes out."

I recommend that readers not be weak-minded enough to be led around by the neck or nose by anyone at any time, and not be personally confused by anyone trying to speak for others or suggesting that a "they vs. us" argument may apply to certain comment posters when such individuals have already stated specific positions that others can read.

I stated my position clearly on December 17, 2006 on this blog.

Here is that full text post and blog link:

I believe that income inequality has continued to increase since 1980. At the same time I haven't been particularly impressed with some of the data analysis and opinions to date, whether from the left or the right.

I do agree with the point raised by Reynolds regarding taxation changes, particularly the Chapter S or S Corporation shift. That's a valid point. Milton Friedman agreed:

Letter from Milton Friedman to Alan Reynolds, July 2006:

"Dear Alan:

As the saying goes, 'It's a long time between drinks.' I recall with pleasure our correspondence in 1971 and have followed with satisfaction the career that developed after you decided to shift from accounting to economics, a wise shift. The paper you sent along is certainly both unique and important. The notion that there has been a substantial increase in inequality, especially at the upper levels, has become conventional wisdom. I am not a tax expert and yours is the first paper I have seen which explains why the tax figures are so misleading. I would not be surprised if accurate figures would show a substantial increase in inequality over the past 40 or 50 years. The deterioration of our educational system plus the large illegal immigration would seem to lead to that result. So also would the technological revolution. But whether that is so or not, you have certainly shown that it cannot be inferred from tax returns. ... Thanks for sending me your paper.

Best regards, Milton"

Treasured letters from Milton
By Alan Reynolds
Thursday, November 23, 2006

I also agree with Milton Friedman's other observations and opinions in his letter to Alan Reynolds. I very much agree.

Posted by: Movie Guy | Dec 17, 2006 12:42:56 AM
"Follow-Up on Inequality"
December 16, 2006 at 11:11 AM
Economist's View blog

[Movie Guy]

Here is a free access link to the op-ed piece written by Alan Reynolds that appears to be the center of the current uproar.

The Top 1% . . . of What?
BY ALAN REYNOLDS
Sunday, December 17, 2006 12:01 a.m. EST

[maria]

Thin skinned people who take themselves far too seriously are usually very funny. And I find making fun of funny people too tempting to resist.

End of this discussion as far as I am concerned.

says...

maria has never said where she attended college or what program she majored in.

What is the answer?

[wcw]

Mr. Reynolds -

One, thanks for attempting to defend your analysis. While I agree with Mr. Thoma that your preference is for obfuscation over illumination, I nevertheless appreciate even that.

Two, I asked that you post "specifications and tables," to which repeating assertions and underlining weasel-word qualifications does not equate. Hiding a putative analysis won't convince many when your conclusion is so diametrically at variance with the expert mainstream.

Three, neither you nor Burkhauser/Feng speak to the simple income quintile shares (top 20%-vs-next 60%) that you continue to ignore. Why do quintile data say exactly the opposite of what you do?

Four, you mischaracterize that paper. Their concern is with the flawed P90/P10 measure -- one you have chosen to introduce. Their analysis notes, "any of the traditional summary measures of inequality are likely to be better measures of changes in the entire distribution over time than the P90/P10 measure."

Five, you interpret the regression of normalized inequality to P90/P10 and Gini measures and to a post-1992 dummy differently than I. It regresses normalized inequality against alternate measures, their interaction and a dummy. That seems effectively useless for measuring inequality trends over time.

Six, even on the Gini trend in this misspecified regression, you too-carefully choose the wage-series pullquote and elide entirely the household-income results. Even on earnings alone, "there is still a positive trend for the Gini, as the F-test on (t+dt=0) is rejected at the 1 percent level." On household income, moreover, "[i]n terms of the post-1992 changes..the Gini suggests a modest increase in inequality."

Please address the relative income shares of the top quintile to the middle three in terms of your assertion that there has been, "sustained and significant increase in inequality since 1988." I am curious to see if you can do it without an equally inappropriate regression.

[Sanpete]

Don't get misdirected by arguing over all this minutiae they are throwing out. It's the typical try to cloud the picture, to obfuscate the results they don't like.

This is pretty sorry stuff to stick in this thread. The topic post was in fact about minutia. It appears that Mark and Krugman were the ones mistaken in this instance. Without admitting that, Mark and others have tried to shift the topic to other things. And still others have just added generic insults and off-topic nonsense. Alan has been more professional here than most others.

[Mark Thoma]

Reynolds is the one who asserted Krugman was wrong and brought all this up, that's why the topic is even being discussed at all - I posted the assertion s soon s he made it. That's how the "minutiae" came to be discussed at all.

[Sanpete]

Again, Mark, in this thread Alan has behaved with more professionalism than others. Your original complaint about his remarks about Krugman wasn't that they were minutia, but that they were wrong. Well, it turns out that you were wrong instead, and you should just admit it and move on. If Alan has been wrong and unprofessional elsewhere, that doesn't excuse you or others here. (On my preview page the part of your comment this last sentence refers to is gone.)

[Mark Thoma]

Yes - I edited my comment and took that out just after posting it - decided not to go there.

Krugman has spoken for himself in the latest post. I've tried to let both Reynolds and Krugman speak for themselves. And they have - and I don't think it supports your conclusion.

[DILBERT DOGBERT]

I remember some time ago MG was saying on another blog that good things were happening in Iraq but that we were just not hearing about them. He had some contacts in the military and they were telling him about the good things. Then I read about how people were being paid to print stuff in the Iraq newspapers. I also read in "Making Light" that there was an emerging business of paying for posts in blogs. I am sure that MG does not fall into these categories but in this new world of ours things like the above make one suspicious of everything one hears or reads.
Happy New Year All

[Movie Guy]

DILBERT DOGBERT,

I still receive emails and calls from men and women in Iraq and Afghanistan. I talked to my cousin during Chirstmas face-to-face as he is inbound to Iraq commanding a battalion.

If you want to question the credibility of troops and leaders, you're wasting your time with me. These people are my friends and relatives.

As for good things, yes they still happen. And no, not much makes the newspapers. But right now the mounting death toll is front and center. I wouldn't expect that to be otherwise at the moment.

If you think I am a paid comment poster, well...that's not only not true, but you obviously don't know much about my character.

[Movie Guy]

Mark Thoma - "Reynolds is the one who asserted Krugman was wrong and brought all this up, that's why the topic is even being discussed at all - I posted the assertion s soon s he made it. That's how the "minutiae" came to be discussed at all."

Mark, why didn't you or Paul Krugman challenge Hederman as Reynolds explained in his post that he was just echoing what Hederman said twelve days ago?

So, no, it wasn't Reynolds that raised the Census Bureau questionnaire challenge, it was Hederman and anne, then Reynolds...all in that order.

Those are the facts.

[Mark Thoma]

For the record:

I have unpublished several of MG's comments.

I will leave anything on topic that adds to the discussion - always have. See above.

[Mark Thoma]

Yes, and as soon as Reynolds - someone who is a public figure at Cato, etc. - made the accusation I posted it along with Krugman's response.

If Reynolds chose to echo Hederman (I don't know who that is other than by a comment here - sorry) without checking for himself, that's his choice. But the post addressed Reynold's assertion.

[Movie Guy]

Yes, Mark, but you never challenged Hederman nor anne.

So, someone who is "big" or a "public figure" has to endorse a statement by another comment poster before the orginal statement is challenged by you or Krugman?

What kind of a message does that send to your other posters?

[Mark Thoma]

I can't respond to the multitude of accusations that are made here daily - it's not possible to follow up on them all. I can't even answer all of your questions let alone all the others.

That's what comments are for - you play a role there for example.

So, I have to pick and choose. That Reynolds is front page once he chose to echo the accusation seems reasonable to me.

[Movie Guy]

If one reads Krugman's original post on top-coding questionnaires, it is clear that Hederman and Reynolds are correct.

One phone call to a good staffer of the Census Bureau will clear that up. And a careful review of SIPP should add further weight to that consideration.

Krugman should have worded his original piece differently. It's not much more complicated than that.

[Mark Thoma]

It's not at all clear, but rather than continuing this, I will just let people read Krugman's latest and decide for themselves.

We should let others weigh in...

[Movie Guy]

Krugman jumps to the main issue as opposed to what he originally stated. I agree with the overall point about income inequality growth, but disagree with his remarks about top-coding questionnaires. His original statement is terribly worded.

Anyway, good exchange.

Gotta run, two hour drive.

All the best and Happy New Year!!

Thanks for an excellent blog. Seriously. None better.

[Mark Thoma]

Thanks for that.

I hope you have a Happy New Year as well.

[Mark Thoma]

Now that there's a bit of a lull, I want to add one thing.

I went to CSU-Chico, about 80 miles from Sac. State (sorry - Sac State is old school - CSU-Sacramento is the right term I think). I grew up pretty much in between the two (a place called Colusa). Because I went to Chico, I'd argue it's better than Sacramento, but that's with admitted bias.

The thing is, a dedicated student can get a good education at either place. Sure, I'd have been better off at UC-Anything, but my financial situation wouldn't permit that and I was lucky to get to Chico at all. (E.g. I probably wouldn't have had to teach some of the Math Econ classes myself like I did at Chico when the guy teaching it had trouble with multivariate calculus - but I learned more that way, so, no real complaints, but it's hard to deny there would have been more opportunities at a higher ranked school.)

There were lots of smart, intelligent people there and I have no doubt that many could compete with the best from anywhere. So, while I understand the use of degrees as a signal of quality, it is an imperfect signal. There are economists from Cal State schools (e.g Mark Watson out of Northridge) who have done very, very well.

I went from Chico to Wash. State University for grad school, also not quite top 20, but from there, after graduating, went to UCSD for a two-year visiting professor/post-doc deal and that was useful. From there, I went to Oregon and have been here ever since except for a one a half year visit at UCSD a few years ago.

Anyway, I can't be too judgmental over pedigree.

[calmo]

Even if you were a high-school dropout Mark, I'd be reading you...and learning.
Thanks for all your work here and even more, for all your patience.
The performance, as always, rather than references to some dated pedigree (which may be not only a little rusty now, but just as likely a little more polished) is guiding your readers (at least the ever so polished ones) and exercising some noodles about issues and not merely adversaries.
We owe you for that.

[akaison]

isn't the job of someone writing an article to check their own facts rather than rely on others. call me a crazy lawyer, but we have to verify legal arguments are correct- why is this different here? or is it because its opinion and one should not be required to have as high a standard? I think forest for tree argument here the problem regardless of how people change focus is that if the point is that this person argument an opinion that was based on false facts, then no one here can disagree with that, can they? and if that is the case, it doesn't matter why they had false facts since I am assuming they had access to the same data did they not?

[DILBERT DOGBERT]

If paid commenters comes to pass then blogs like this one that informs us will be dead dead dead.
I am interested in your comments MG and you add a lot to the discussions. Thanks for your efforts. Good luck to all those who must serve in Iraq.

[maria]

Brad Setser makes an interesting observation re the rise of inequality in the US:

Brad Setser | Jan 01, 2007

Stephen Pearlstein’s column “Public debt, private wealth” argues that surge in demand for US financial assets from emerging economies – and overwhelmingly from the governments of emerging economies, not private investors -- be they Asian central banks or oil investment funds – has had a profound impact on the distribution of wealth in the US. I agree.

Pearstein writes:

These countries know that if they were to try to exchange all those dollars for their own currencies, it would drive down the value of the dollar -- and with it, demand by American consumers for all the things they sell. Rather than accept slower growth and higher unemployment, they have decided to keep their currencies loosely pegged to the dollar by investing those trade-surplus dollars in U.S. assets.

One obvious effect of this decision is to drive up demand for U.S. stocks, bonds and real estate, which foreigners have purchased either directly or through such intermediaries as hedge and private-equity funds. Their money was a significant factor in the tech and telecom bubbles of the 1990s, the current bubble in corporate takeovers and commercial real estate, and the just-ended bubble in residential real estate. Indirectly, it also helps explain why stock prices are at or near all-time records.

…. So what does this have to do with income inequality? Quite a bit, actually.

We've known for a long time that increased trade with low-wage countries depresses wages of workers who produce goods and services now imported. A trade deficit equal to 7 percent of economic output obviously magnifies that effect.

But as the trade deficit is depressing wages at the bottom, it is now boosting incomes at the top by significantly inflating the value of stocks, bonds and real estate -- assets whose ownership is concentrated heavily in the hands of high-income people. By buying and selling these assets, and borrowing against them, these people have been transforming their paper wealth into spendable (and measurable) income at a record pace.

You can read the whole thing on his blog.

[maria]

Mark: Yes one can educate oneself even at low ranking places. But what about not finishing the course and getting a degree? Doesn't failure to ever get a degree say something that isn't good about the person involved?

[maria]

Here is Pearlstein's article that set Setser to thinking.

http://www.washingtonpost.com/wp-dyn/content/article/
2006/12/26/AR2006122600863.html

[Sanpete]

Maria, we can probably settle very little about top-coding and such by discussing what Alan's degree might be. If the topic were how good Alan is at economics, you might have point, though even there it would be better to examine his work than his degrees, don't you think?

[maria]

Well, since the question of how good he is at economics seems in dispute, and the question is so intricate, or seems to be, then I would have to look at his credentials, or lack of them. You would appear to think credentials are meaningless. If so, why do people bother with Ph.Ds and such? Is all that just a load of garbage?

[Sanpete]

Maria, the question of how good he is is in dispute here, but not because it's particularly relevant to top-coding. In fact it has functioned here as a way of avoiding dealing with the facts that are most relevant.

says...

maria has never stated where she attended college nor the degree(s) she supposedly received.

Why dodge the scholastic achievement issue maria?

says...

Who bothered to follow up on P.K.'s claims about top-coding other than a few who commented here, including Alan Reynolds?

[Alan Reynolds]

The Census Bureau does have internal limits (which differ from top coding) on the amount of income recorded for various sources of income -- so much for salary on a first job, so much for Supplemental Security Income, etc. Although there are no such limits on total income, the categorical limits do result in understating top incomes, particularly before 1993 when the limits were tripled (as Krugman noted). The main point to take away from that is that we cannot compare Census income shares and Gini ratios before and after 1993. As the Aug 2007 Census report says, "There have not been any statistically significant annual changes in the Gini index over the past 10 years." The change in reported upper incomes between 1992 and 1993 was a statistical illusion. Comparing recent Census data with figures from 1979-81 is either ignorant or dishonest.

The Statistics of Income sample from tax returns does capture very high incomes better than the Census survey, particularly those over $5 million (the top one-hudredth of one percent). But IRS data does a very bad job of capturing lower incomes -- particularly income from transfer payments and unreported sources.

Another big problem is that people are free to report business income under either the corporate or individual tax return. When they switch from reporting under the corporate tax to reporting as Sub S, LLC or partnerships (which happens whenever individual tax rates are cut) it appears as an increase in top incomes. But that too is a statistical illusion.

If all business income was taxed on a pass-through basis, like a partnership, then I would agree that studies by CBO and Piketty-Saez are more accurate than Census data for the very highest incomes, but not for income in general.

[calmo]

Thanks for rejoining us Alan and reviving a dormant thread.
I think you raise an interesting point about the '93 change but this criticism Comparing recent Census data with figures from 1979-81 is either ignorant or dishonest. is a tad harsh, kemo sabey. Couldn't we just leave it as "uninformed"? (No, Tonto, I couldn't...but you Indians are always on the warpath --it is the only game you wagon-burners know.)
Speaking of uninformed, would you say that documentation of the super-rich is not likely to be a co-operative affair? I imagine there are problems at the other end of this distribution with somewhat documented low income earners, but not like those with resources to provide suitable (rather than "complete") information.