Piketty rejects 'ridiculous' allegations of data flaws

Says there's no mistake or error in his work

Thomas Piketty rejected allegations that data behind his best-selling book on inequality are flawed as fellow economists spoke up in his defence.

Piketty, the French economist whose book Capital in the Twenty-First Century has transformed the debate on the causes and consequences of disparities in income and wealth, called a Financial Times analysis of his statistics "just ridiculous". He added in an e-mail to Bloomberg News that "there's no mistake or error" in his work.

The newspaper's economics editor, Chris Giles, wrote last week that figures underpinning the 696-page book contain unexplained statistical modifications, "cherry picking" of sources and transcription errors. He said the mistakes undermine Piketty's conclusion that wealth inequality in Europe and the US is moving back toward levels last seen before World War-I.

After correcting for the alleged errors, two of the book's "central findings - that wealth inequality has begun to rise over the past 30 years and that the US obviously has a more unequal distribution of wealth than Europe - no longer seem to hold," according to Giles.

Economists disputed that assertion. Scott Winship, a fellow at the New York-based Manhattan Institute for Policy Research, said the newspaper's allegations aren't "significant for the fundamental question of whether Piketty's thesis is right or not".

'Abundant evidence'
James Hamilton, an economics professor at the University of California, San Diego, said there's "abundant evidence" of widening inequality "from a good many sources besides Piketty".

Giles declined to comment. Bloomberg LP, parent of Bloomberg News, competes with the Financial Times and its publisher Pearson Plc in providing business news and information.

Piketty, a 43-year-old professor at the Paris School of Economics, examined centuries of data on countries including the US, Sweden, France and the UK to show that returns on capital in excess of economic growth lead to widening disparities in wealth.

One "serious discrepancy" Giles said he found was in Piketty's data on the UK. While Piketty cited a figure showing the top 10 per cent of its population held 71 per cent of national wealth, a survey by the country's Office for National Statistics put the figure at 44 per cent.

The survey cited by Giles "is based upon self-reported data and is very low quality," Piketty said in his email. Other economists agreed.

Taken as gospel
"The FT seems to take that survey as gospel, and I think that's a mistake," said Gabriel Zucman, an assistant professor at the London School of Economics whose research focuses on global wealth, inequalities and tax havens. "Anybody involved in this literature knows that survey data can massively underestimate wealth inequality. In this case, that is exactly what is happening."