Thomas Piketty’s "Capital": The professor responds

THIS week’s Free exchange column looks at the debate over Thomas Piketty’s wealth inequality data and calculations, part of his blockbuster work on inequality, “Capital in the Twenty-first Century”. The discussion was initiated last week by a series of pieces written by the economics editor of the Financial Times, Chris Giles:Mr Giles’s focus is on wealth distribution, where the book provides numbers for Britain, America, France and Sweden. His interest was piqued by a discrepancy between Mr Piketty’s numbers on the share of wealth held by Britain’s richest 10% (over 70%) and the latest figures from the government statistical agency (44%). This gap prompted Mr Giles to pore over Mr Piketty’s spreadsheets, which, to the economist’s credit, are all posted online. Several oddities surfaced, such as discrepancies between numbers in the source material Mr Piketty cites and those that appear in his spreadsheets; a large number of unexplained adjustments to the raw data (often in the form of a constant written into the Excel spreadsheet cell); inconsistency in how underlying source data were combined; and the frequent interpolation of data, without explanation, when underlying sources were missing. For instance, none of the sources Mr Piketty used had data for the top 10% wealth share in America between 1910 and 1950. So he assumed their wealth share was consistently that of …

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