Oh Dear, Piketty’s Numbers Aren’t Right

That Thomas Piketty offered us all an interesting critique of how contemporary capitalism works is interesting. It’s an interesting critique too. The question though is, well, is it a realistic one? Is he describing this world we inhabit or one that exists only in his head?

It’s looking more and more like the latter:

This article utilizes a replication exercise to evaluate the reliability of the historical time series for top income share concentrations in the United Kingdom, as presented in Thomas Piketty’s Capital in the Twenty First Century (2014). Piketty’s depiction of the top 1% and 10% wealth shares for 1910 to 2010 is compared against both his source data and subsequent improvements by other scholars. Piketty’s time series is shown to diverge substantially from each, and does not appear to be replicable. In particular, Piketty introduces a sizable post-1980 adjustment that suggests a substantially more rapid acceleration of wealth concentration than its source statistics reveal. Issues of reliability in the U.K. time series mirror similar problems with Piketty’s wealth estimates for the United States, although their implications for historical interpretation differ in light of subsequent data. These findings indicate that Piketty’s historical account of changing wealth concentrations in the United Kingdom in the 20th century is unreliable. An alternative interpretation of the source data is therefore offered, pointing to a century long L-shaped pattern in place of Piketty’s depicted U-curve.

It’s rather like Paul Krugman’s comment about the US. Sure, it could happen here, might be happening, but we’ve no actual evidence that it is and absolute evidence that it hasn’t.

But then, you know, facts. They’ve not stopped people lapping up The Spirit Level, have they?