Financial Times’ Piketty Claims are Overstated
Financial Times economics editor Chris Giles claims to have found evidence that Thomas Piketty skewed trends and cross-national rankings in his heralded Capital in the Twenty-First Century. However, while I have
several criticisms of Piketty’s book, the supposed data issues Giles has turned up have been blown way out of proportion.
Most of these issues have barely any effect on Piketty’s trends or overall argument. The wealth inequality trends for France and Sweden follow the same path under Piketty and Giles’ calculations. Here is the comparison for Sweden:
Giles himself made several mistakes in his criticism. For instance, he says that Piketty’s decision to average wealth inequality estimates for the U.K., Sweden, and France without weighting the country estimates by population changes the results; it does not. Piketty used a questionable data point for 2010 for the U.K. top one percent’s share of wealth, but Giles picks an obviously incomparable estimate for that year.
Only a couple of issues Giles highlighted, for the United Kingdom in 2010 and the United States in 1970 and 1980, appear to matter, but in the worst case for Piketty, they would make the originally unimpressive trends look less ambiguously benign.
Even if Giles’ numbers were right, the issues would have minimal consequences for Capital’s thesis since it does not rely on wealth inequality growing between 1980 and 2010 or Europe having higher wealth inequality than the United States.
Piketty has made vast quantities of his data available online. This is how Giles found the “problems” to begin with. It is unlikely that a renowned academic such as Piketty would willfully fudge his data and then post it online for the world to double-check.
Piketty’s work has to use different sets of data with varying levels of comparability to show historical wealth trends across countries. This requires some adjustment to smooth historical trend lines. While he should have included further explanation of some of his choices, the rationale behind them is sensible in nearly all cases.
There are much larger problems with Piketty’s book than what Giles finds. It is irresponsibly speculative, and Piketty’s inequality estimates sometimes give the wrong impression. I believe his policy preferences would prove harmful to the middle class and poor in the long run. However, Giles is just wrong that the data issues he identifies weaken the book’s thesis.
For more on this topic, see my longer Forbes article, “The Financial Times Is Blowing PIketty’s Data Issues Out of Proportion, Part 1.”
Scott Winship is the Walter B. Wriston Fellow at the Manhattan Institute for Policy Research. You can follow him on Twitter here.
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