Carter Price — Piketty’s data deserve better analysis

While it is clear that Giles spent some time looking over Piketty’s spreadsheets, he jumps to conclusions that are not supported by the points he raises.

Indeed, my examination of Giles’ analysis and the spreadsheets that Piketty provided to the public indicate that perhaps the key claim by Giles is erroneous....

Giles uses the raw, non-harmonized wealth data to claim that wealth inequality in the United States has been flat and that it has been decreasing in the United Kingdom. Yet by combining these non-harmonized data sets, Giles is comparing apples to oranges. To say that this deviates from best data practices would be an understatement....

Many of Giles’ other critiques highlight the difficult choices that economists must make when working with complicated data. Some of his points about data mistakes suggest that Piketty may need to update a few figures and data points in a second edition of his book. Just like many textbooks (and other publications such as the Financial Times) contain errata, so will this 700-page empirical work. Some of Giles’ points do require a more thorough response from Piketty than the one he has already given, especially Giles’ claim that Piketty sometimes cherry-picks his data. None, however, seem likely to ultimately undermine Piketty’s basic empirical insight—that across time, societies tend toward an ever-increasing consolidation of wealth in the hands of the few.

In this light, Giles’ critique of Piketty’s research jumps the shark when he compares it to the Reinhart and Rogoff spreadsheet scandal, where their widely-cited debt study was used to push fiscal austerity policies for debt-burdened economies was debunked when a graduate student got his hands on their spreadsheets and discovered that they had made a summation error that materially altered their conclusions....

I’m not alone in drawing this conclusion after a careful look at Giles’ points and Piketty’s data. Some of the best analysis on this that I read over the long weekend includes:...

WCEG — The Equitablog
Piketty’s data deserve better analysis
Carter Price, Senior Mathematician
(h/t Mark Thoma at Economist's View)