Thursday, August 28, 2014

FT: Piketty data "undercut by a series of problems and errors"

Justin Sullivan/Getty

The universally praised element of Thomas Piketty's Capital in the 21st Century is its collection of historical data on wealth, so allegations from Chris Giles at the FT that his construction of data series is riddled with errors is a really big deal. Giles argues that Piketty's "estimates of wealth inequality — the centrepiece of Capital in the 21st Century — are undercut by a series of problems and errors."

Except that in most cases — with the exception of the United Kingdom — the actual disagreement doesn't seem very large.

Here's Giles' chart showing Piketty's data for France versus what Giles thinks is right:

Wealth-inequality-in-france

Financial Times

Now by contrast, on the United Kingdom they have a real disagreement:

Raw-uk-wealth-inequality-1810-to-2010

Financial Times

Then there's Sweden, where even Giles says "There appear to be few problems with the choices made by Prof. Piketty for Sweden."

For the US, Giles raises an objection to how Piketty deals with a data lapse between 1870 and 1910, but doesn't really say Piketty's data points are mistaken. Piketty's own response here seems a little half-baked and it will be interesting to see what he comes up with when he has more time. For the moment, the FT's strongest claims don't seem all that clearly supported by their analysis. But the disagreement about UK trends is large and interesting.

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