Economics, Current Events

The Piketty Controversy

Some general thoughts on the controversy over Piketty and his data.

1. We have no evidence he intentionally falsified data. There are problems and anomalies and questions about cherry-picking and the like, so he definitely has some ‘splainin’ to do. However, this is not about fraud. It’s not Bellesiles. Yet.

2. Economists make adjustments to data all the time, especially when dealing with old, incomplete, and inconsistent data sets. The question is whether they are justified or just done to make the data consistent with your priors. Piketty has a potential problem here and we need to see what his response is.  His first round reply in the Financial Times was a whole bunch of nothing.

3. If there are real data problems (and they aren’t about intentional falsification), then we need to consider how fatal those are to his argument. With Reinhart and Rogoff, the data errors didn’t change the overall argument, but did toss out the 90% threshold which wasn’t the central point anyway. So let’s see how this plays out.

The revelations of the last few days are yet more reasons (along with other errors of theory and history) to treat the book skeptically, but they are not indications of academic fraud, nor is it clear how fatal they are to his argument. Yet. Those juries are still out, but the preponderance of the evidence is starting to mount.

(Cross posted at Coordination Problem)

  • Sean II

    I for one am hoping like hell there is no actual fraud. I don’t want Piketty to go down as the Milli Vanilli of 21st century Leftism, just some Eurotrash pop econ act that got too famous for its own good, blew up, and became a punchline.

    I would rather see the debate continue as it began, with the Left candidly admitting it cares more about leveling than material progress, and with everyone else having to decide whether they want a richer life marred by the occasional bout of yacht envy, or a poorer one enriched by pleasure of killing the neighbor’s cow.

    This was never about the evidence anyway. It’s been obvious from the start that people were praising and writing coverage on Piketty’s book before they read it, and certainly before they had time to read it critically (wassup, Bas!). It’s equally obvious that Piketty started with his conclusion, and would never have allowed himself to reach a different one.

    As we define such things, that is not considered academic fraud. That’s just how business is done in the humanities. Indeed, we might all be better off if people were less pretentious about being scholars, and more open about being advocates.

    • Les Kyle Nearhood

      You are exactly right. I am going under the assumption that the data is mostly pretty good. If so, I have no doubt that someone else will use the data to come up with theories which Piketty would be uncomfortable with. This happens all the time.
      Taking a long term view inequality will increase. It will increase even if governments invoke a new round of progressive taxation. The reason is that we live in a global marketplace now. The entreprenuer who, in the past, could sell a good product or service to a regional market of millions can now sell to billions. Likewise an investor can put their money anywhere not just the exchanges in their own nation.
      It is important to make the case that inequality, by itself is meaningless. No population ever revolted because some people had more money than others. They revolt because there is no food, or no freedom, or no hope.

    • martinbrock

      It’s just how business is done in the humanities.

      It’s par for the course in the social sciences, and if we believe Kuhn and Popper (I do), the physical sciences aren’t fundamentally different. “All truth is subjective”, that caricature of postmodernism, does not follow from Popper’s thesis, but “all useful conclusions follow questionable assumptions” does.

      Those of us sympathetic to Piketty’s counterpoints serve ourselves and our own assumptions best by turning a skeptical eye toward ourselves. If we want to defend a thesis akin to Rothbard’s Man, Economy and State, carefully questioning Rothbard’s assumptions is more useful than focusing a critical eye exclusively on arguments reaching different conclusions. If Piketty had followed this course, he might have discovered his more glaring errors before publication.

  • (3) is the problem with most of the Piketty criticism. For example, you could cite his theoretical mistakes, but few economists have actually made a good, persuasive case as to how this undermines his case. I’m not saying they’re wrong; my ideological priors side with them. But, a lot of the criticism falls short (and there’s some very good criticism). Of course, a lot of the other side of the debate hasn’t been much better. I think DeLong’s comments are amongst the best.

  • JoshInca

    The real problem with most critiques of Piketty’s work is a failure to challenge the underlying premise that inequality in and of itself is a problem that needs to be addressed, let alone an escalating one.


    Everything you say here is logical, thoughtful, and judicious. I just wish that Piketty’s acolytes had been as appropriately sober and analytical.

    • Les Kyle Nearhood

      Well, you have to understand. Those who are married to the idea of redistribution have seen nothing but a nightmare to their theories since the opening of the global marketplace and the rise of (somewhat)free markets in places like China. The opposite of what they predicted happened. Communism fell, and millions were lifted out of poverty.
      The result is that they are like people dying of thirst in the desert. Piketty gives them a new hope, a new rational for stealing other people’s money.