The Financial Times headline yesterday all but smirked. “Star economist Piketty did his sums wrong in bestseller that tapped inequality zeitgeist.” The story dominated the front page.
The large photo, which captured Piketty’s defensive, appraising gaze in some earlier q&a session, bore the caption, “Pause for thought: a FT investigation undercuts Prof. Piketty’s central theme that inequalities are heading back to levels last seen before the First World War.”
Columnist Chris Giles wrote that the central findings of Capital in the Twenty-First Century, Piketty’s best-seller, which appeared last month in the US to generally glowing reviews, depends on an assemblage of data which “contain a series of errors that skew his findings.”
The investigation found numerous mistakes…: simple fat-finger errors of transcription; suboptimal averaging techniques; multiple unexplained adjustments to the numbers; data entries with no sourcing; unexplained use of different time periods; and inconsistent uses of source data….
Once the data are “cleaned and simplified,” wrote Giles, “the European results do not show any tendency towards rising wealth inequality since 1970.” Nor do they support Piketty’s contention that wealth inequality is greater in the US than in Europe, he wrote.
Giles communicated the details of his finding to Piketty on Thursday (he has since set them out in a long post on the FT “Money Supply” blog). Piketty responded politely the next day, but stuck to his guns:
I have no doubt that my historical data series will be improved in the future but I would be very surprised if any of the substantive conclusions about the long-run evolution of wealth distribution was much affected.
Economic Principals is traveling. I haven’t finished Piketty’s book, much less digested the avalanche of commentary it has provoked. I haven’t even worked the Giles indictment of Piketty’s data assembly.(Here are Times reporter Neil Irwin and commentator Justin Wolfers on the controversy.) But, I thought, as I glanced through the FT’s Friday “How to Spend it” magazine supplement, with its full-page ads for expensive watches, yachts and even a antique steam train, I doubt that Giles will make the Zeitgeist go away.