Defending the One Percent

Defending the One Percent

I magine a society with perfect economic equality. Perhaps out of sheer coincidence, the supply and demand for different types of labor happen to produce an equilibrium in which everyone earns exactly the same income. As a result, no one worries about the gap between the rich and poor, and no one debates to what extent public policy should make income redistribution a priority. Because people e...

The One Percent

Recent protest movements brought attention to the one percent, a segment of the population that is critical to understanding inequality and social mobility but that attracts relatively little research attention. In this article, I survey current research on the one percent in the United States. I distinguish income from wealth and show that both are very concentrated but that the concentration ...

Defending the Dynamical Hypothesis

The Seven Percent Illusion?

From 1995 to 1998, more than 90 percent of mid-range IPOs were charged underwriter fees, or spreads, of exactly seven percent, even though evidence suggests that economies of scale in the size of the offering should allow for lower fees. Chen and Ritter (2000) offer collusion as a possible explanation based on empirical analysis and observation. Alternatively, we investigate whether the spreads...

Defending Diversity

Why do some observations lead to broad generalizations whereas other observations do not have as much influence on people's beliefs? One principle of evaluating evidence is the diversity principle, which states that more diverse evidence should lead to stronger inferences than a narrow sample of evidence. For example, if you see someone repeatedly acting aggressively while giving lectures, you ...