Alan Reynolds of the Cato Institute explains for National Review Online readers why most media accounts have missed the mark while attempting to explain new data regarding America’s top “1 percent.”

Every year, new estimates of the incomes of the “top 1 percent” are reported with the requisite fanfare from Thomas Piketty of the Paris School of Economics and Emmanuel Saez of the University of California, Berkeley. And every year the press gets the numbers all wrong.

“Worry Over Inequality Occupies Wall Street,” writes Justin Lahart of the Wall Street Journal. An odd worry, when stocks keep hitting record highs. In reality, top income shares always rise and fall with the stock market because of capital gains, stock options, and bonuses and fees tied to stocks.

“Messrs. Piketty and Saez,” says Lahart, “show the top 1 percent captured 19.3% of U.S. income in 2012. The only year in the past century when their share was bigger was 1928, at 19.6%.” That comparison is incredibly misleading. Piketty and Saez don’t include $2.3 trillion of transfer payments in “U.S. income,” even though transfers accounted for over 16 percent of personal income in 2009 and almost zero in 1928.

Extolling Piketty and Saez as “everyone’s favorite inequality-tracking researchers,” Dylan Matthews of the Washington Post writes, “Shockingly — shockingly — what [Piketty and Saez] found is that while only 49 percent of the decline in incomes during the recession was born [sic] by the top 1 percent (whose income share fell to 18.1 percent due to the recession), 95 percent of income gains since the recovery started have gone to them.”

There is an interesting story in these numbers, but it is not a story journalists choose to report. It turns out that the same table Matthews reprinted from Piketty and Saez shows the top 1 percent’s real income fell by 36.3 percent from 2007 to 2009, then rose by only 31.4 percent from 2009 to 2012. The 36.3 percent decline, of course, was calculated from a much larger base than the subsequent 31.4 percent recovery.

Since top incomes fell more than they rose, you might expect the Post’s Mr. Matthews to note that over the whole period, the net change was a decline in top incomes rather than an increase. Down is not up, even in economic journalism. Yet every major media outlet, even The Economist and the Wall Street Journal, gullibly reported the data — adding up to a five-year decline — as evidence the rich are continually getting richer.