Do we really live in an “age of inequality”?

In recent weeks, a major debate has gripped the field of economics, one with significant policy stakes. In one sense, the debate is about the nature and extent of inequality in the US: are the rich really taking more of the pie than ever before? Has their share of income been growing very fast, or gradually? Is inequality the defining challenge of our time, or simply one among many?

In another, perhaps more accurate, sense, the debate is about how to interpret IRS audit studies and assign retirement income across...