Edward Conard

Top Ten New York Times Bestselling Author

  • “A full-throated defense of economic dynamism.” - The Wall Street Journal
  • “Unintended Consequences should be read by anyone who takes for granted the superiority of progressive taxation and has not thought carefully about the trade-offs involved.” - The New Republic
  • “…a must-read for serious students of economic policy.” - Glenn Hubbard, Dean, Columbia Business School, and former Chairman of the Council of Economic Advisers
  • “…reminds us that inequality sends a signal of what society lacks most, in America’s case, entrepreneurship and risk taking.” - Lawrence Lindsey, CEO, The Lindsey Group, former Director of the National Economic Council
  • “…a fresh argument for the productive value of inequality.” - David Autor, Professor of Economics, Massachusetts Institute of Technology
  • “…serious thinking for serious thinkers. …a thought-provoking blueprint for growing middle- and working-class incomes.” - Mitt Romney, former Governor of Massachusetts
  • “…serious thinking for serious thinkers. …a thought-provoking blueprint for growing middle- and working-class incomes.” - Mitt Romney, former Governor of Massachusetts
  • “There are an amazing number of good ideas and interesting points made in Unintended Consequences. The thinking underlying it, and the obvious depth of understanding of the author, are very impressive.” - Steven Levitt, coauthor of Freakonomics; 2004 John Bates Clark Medal
  • “…a very valuable contribution.” - Larry Summers, former Secretary of the Treasury and director of the National Economic Council, president emeritus, Harvard University
  • “…a comprehensive explanation of the modern economy.” - Julian Robertson, Founder, Tiger Management
  • “Unintended Consequences is far smarter and more thought-provoking than most economics written for the general public” - Greg Mankiw, Harvard University, Former Chairman of the Council of Economic Advisors
  • “Unintended Consequences provides a provocative interpretation of the causes of the global financial crisis and the policies needed to return to rapid growth. Whether you agree or not, this analysis is well worth reading.” - Nouriel Roubini, New York University; Chairman, Roubini Global Economics
Upside of Inequality Oxford Unintended Consequences

Macro Roundup


Sunday, December 29, 2013

AI Summary. Demographic aging is projected to shrink the share of working-age Americans and weigh on productivity, while top income brackets capture a larger share of economic gains. Absent policy responses such as greater investment in education and workforce development, median income is projected to stagnate or decline.

Bill Steele Cornell Chronicle
Date Posted:
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Demographic shifts are poised to significantly impact median income levels in the U.S., with projections indicating a decline in the average American’s income position. @BillSteele

Will an aging population push median American incomes lower?

Core argument: Demographic shifts in the U.S., including an aging population and a shrinking share of working-age individuals, are projected to lower the average American's income position and reduce overall economic productivity.

Demographic shifts are poised to significantly impact median income levels in the U.S., with projections indicating a decline in the average American's income position. As the population ages, the proportion of working-age individuals is expected to decrease, leading to a potential reduction in overall economic productivity. This demographic trend is compounded by a growing income disparity, where the top income brackets continue to capture a larger share of economic gains. The combination of these factors suggests that without policy interventions, such as increased investment in education and workforce development, the median income may stagnate or decline. This shift could have broad implications for consumer spending, economic growth, and social stability, necessitating strategic planning from policymakers and business leaders to mitigate potential negative outcomes.

Takeaways by Macro Roundup® AI

  1. Demographic shifts in the U.S., including an aging population and a shrinking share of working-age individuals, are projected to lower the average American's income position and reduce overall economic productivity.
  2. Growing income disparity, with top income brackets capturing a larger share of economic gains, compounds demographic pressure on median income, which may stagnate or decline absent policy interventions such as investment in education and workforce development.
  3. A stagnating or declining median income could carry implications for consumer spending, economic growth, and social stability, calling for strategic planning from policymakers and business leaders.

Bill Steele, 'Average American' will slide down income scale, Cornell Chronicle, August 29, 2013, http://www.news.cornell.edu/stories/2013/08/average-american-will-slide-down-income-scale

Monday, December 30, 2013

AI Summary. Median real income growth over roughly three decades measures 3.2% using tax units but 36.7% after switching to households and adding government transfers, tax cuts, household-size adjustment, and employer-provided health insurance. The authors argue widely cited tax-unit data understate middle-class income growth by omitting these elements.

Greg Mankiw Greg Mankiw's Blog
Date Posted:
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Greg Mankiw’s Blog @GregMankiw: From 1979 to 2007, median real income for tax units increased by only 3.2%, but 36.7% when adjusting for household size & employer-provided health insurance.

Does the income measure chosen change middle-class income growth estimates?

Core argument: Median real income from 1979 to 2007 rose 3.2% measured across tax units but 12.5% measured across households, showing that the choice of income unit alters conclusions about middle-class stagnation.

From 1979 to 2007, median real income for tax units increased by only 3.2%, suggesting stagnation. However, when considering households instead of tax units, the increase is 12.5%. Including government transfers raises this to 15.2%, and factoring in tax cuts further elevates it to 20.2%. Adjusting for household size, the growth reaches 29.3%, and incorporating employer-provided health insurance boosts it to 36.7%. These adjustments highlight the importance of selecting appropriate income measures, as they significantly alter perceptions of middle-class income growth. The Burkhauser paper critiques the Piketty-Saez data for focusing on tax units, excluding transfers, and not accounting for household size or non-taxable compensation, underscoring the need for comprehensive data analysis in economic discussions.

Takeaways by Macro Roundup® AI

  1. Median real income from 1979 to 2007 rose 3.2% measured across tax units but 12.5% measured across households, showing that the choice of income unit alters conclusions about middle-class stagnation.
  2. Successively adding government transfers (15.2%), tax cuts (20.2%), adjustment for household size (29.3%), and employer-provided health insurance (36.7%) raises measured median real income growth from 1979 to 2007 above the 3.2% tax-unit figure.
  3. The Burkhauser paper critiques the Piketty-Saez data for focusing on tax units, excluding transfers, and omitting household size and non-taxable compensation.

http://economics.cornell.edu/uploads/Burkhauser%20paper.pdfhttp://gregmankiw.blogspot.com/2013/12/on-measuring-changes-in-income.htmlOn Measuring Changes in Income

Take this as a cautionary tale. When people talk about changes in income over time, make sure you know what measure of income they are citing.

So, during this period, has the middle class experienced stagnant real income (a mere 3.2 percent increase) or significant gains (a 36.7 percent increase)? It depends on which measure of income you look at. It seems clear to me that the latter measure is more relevant, but the former measure of income often gets more attention than it deserves.

6. There is still one thing left: employer-provided health insurance, an important fringe benefit that has grown in importance. Adding an estimate of that into income raises the 29.3 percent figure to 36.7 percent.

5. But not all households are the same size, and the size of households has fallen over time. Adjusting for household size increases that 20.2 percent to 29.3 percent.

4. What about taxes? The middle class received some tax cuts during that period. Factoring taxes in, the 15.2 percent figure rises to 20.2 percent.

3. Now consider government transfer payments. If we add those in, that 12.5 percent number becomes an even better 15.2 percent.

2. Households are more important than tax units. Two married people are one tax unit, whereas a couple shacked up are two tax units. We would not want to treat the movement from marriage to shacking up as a drop in income. If we look at households rather than tax units, that meager 3.2 percent rises to a bit more respectable 12.5 percent.

1. From 1979 to 2007, median real income as measured by pre-tax, pre-transfer cash income of tax units rose by only 3.2 percent. That is a paltry amount for such a long period. You might conclude that middle class incomes have been stagnant. But wait.

Does this matter? Yes! Here are some numbers from the Burkhauser paper:

This national conversation has generated renewed attention to the highly influential Piketty-Saez data. It is worth pointing out, therefore, some limitations of these data, which have been stressed by Cornell economistRichard Burkhauser: The data are on tax units rather than households, they do not include many government transfer payments, they are pre-tax rather than post-tax, they do not adjust for changes in household size, and they do not include nontaxable compensation such as employer-provided health insurance.

To divert attention from the disastrous rollout of his health reform, President Obama has decided to change the national conversation to discuss increasing inequality. This phenomenon is not new--the trend started about four decades ago--but it is real and important. In case you are a new reader of this blog, you can find my personal views on the matterin this paper.