Row 680

Row ID: 680 | Dataset Entry | Axioma AXP Content Repository

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>I don't think the OP is inherently trying to assume Cobb-Douglas, but rather show that even in Cobb-Douglas, the use of Beta is a poor indicator of inequality. It remains to be seen, but probably would be true for other models aside from Cobb-Douglas.

**Exactly** **this!** My critique is akin to a proof by contradiction. In the simple Cobb-Douglas case, which I appeal to because it is so mathematically tractable, capital to *net* output ratios are a poor predictor of income inequality since they do not describe the division of output between capital and labour in any meaningful way - rather we should focus on capital to *gross* output ratios.

>you'd need some additonal assumptions (which are not laid out) to use beta as an accurate assessment of income inequality

If by beta you mean capital to *net* output ratios (which I have labelled beta-tilde), then I do not think there are any assumptions which would make them a good indicator of inequality. Capital to *gross* output ratios (which I have labelled beta) are clearly more preferred in the benchmark Cobb-Douglas case.

I am very hard pressed to find a legitimate reason for favouring net ratios. [Piketty and Zucman (2013, p. 13)](http://piketty.pse.ens.fr/fichiers/PikettyZucman2013WP.pdf) claim they "find it more transparent to express everything in terms of net saving rates", and yet in the same paragraph they use β in β = s/g to mean K/(Y-δK) and then β in β = s/(g+δ) to mean K/Y, without making any distinction between the two, hardly transparent! See [https://imgur.com/a/ELQcBZJ](https://imgur.com/a/ELQcBZJ) for a derivation if unconvinced.

I really do not think highly of Piketty as an economist any more: either he is purposefully deceitful in pursuit of sensation or he has written a 600 page book without getting to grips with the difference between net and gross ratios - I don't know which is worse

Field	Value
text	>I don't think the OP is inherently trying to assume Cobb-Douglas, but rather show that even in Cobb-Douglas, the use of Beta is a poor indicator of inequality. It remains to be seen, but probably would be true for other models aside from Cobb-Douglas. Exactly this! My critique is akin to a proof by contradiction. In the simple Cobb-Douglas case, which I appeal to because it is so mathematically tractable, capital to net output ratios are a poor predictor of income inequality since th…
label	r/econpapers
dataType	comment
communityName	r/EconPapers
datetime	2021-07-30
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Raw Record

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  "text": ">I don't think the OP is inherently trying to assume Cobb-Douglas, but rather show that even in Cobb-Douglas, the use of Beta is a poor indicator of inequality. It remains to be seen, but probably would be true for other models aside from Cobb-Douglas.\n\n**Exactly** **this!** My critique is akin to a proof by contradiction. In the simple Cobb-Douglas case, which I appeal to because it is so mathematically tractable, capital to *net* output ratios are a poor predictor of income inequality since they do not describe the division of output between capital and labour in any meaningful way - rather we should focus on capital to *gross* output ratios.\n\n>you'd need some additonal assumptions (which are not laid out) to use beta as an accurate assessment of income inequality\n\nIf by beta you mean capital to *net* output ratios (which I have labelled beta-tilde), then I do not think there are any assumptions which would make them a good indicator of inequality. Capital to *gross* output ratios (which I have labelled beta) are clearly more preferred in the benchmark Cobb-Douglas case.\n\nI am very hard pressed to find a legitimate reason for favouring net ratios. [Piketty and Zucman (2013, p. 13)](http://piketty.pse.ens.fr/fichiers/PikettyZucman2013WP.pdf) claim they \"find it more transparent to express everything in terms of net saving rates\", and yet in the same paragraph they use β in β = s/g to mean K/(Y-δK) and then β in β = s/(g+δ) to mean K/Y, without making any distinction between the two, hardly transparent! See [https://imgur.com/a/ELQcBZJ](https://imgur.com/a/ELQcBZJ) for a derivation if unconvinced.\n\nI really do not think highly of Piketty as an economist any more: either he is purposefully deceitful in pursuit of sensation or he has written a 600 page book without getting to grips with the difference between net and gross ratios - I don't know which is worse",
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Entry Information

Entry ID: 680
Repository: Axioma AXP
Dataset: arrmlet/reddit_dataset_36
Total Entries: 100,000