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Thomas Piketty's 'Capital' Data Rife With Errors, FT Says

The "rock star" economist's "Capital" is a best-seller, but a new report from the Financial Times pokes holes in Piketty's data on wealth inequality.
Posted at 7:53 PM, May 24, 2014

If an economist can truly be called an "overnight sensation," Thomas Piketty is it. The Frenchman's book "Capital in the Twenty-First Century" became a bestseller, despite its dense subject matter. There's even been speculation of a Nobel Prize nomination. But now critics are poking holes in the book's findings. (Via Flickr /Parti Socialiste du Loiret, Nook)

Essentially, the book posits that growing inequality is sending the western hemisphere into a new Gilded Age — one that could ultimately lead to the end of capitalism and massive global unrest.

PIKETTY: "Inequality matters because our democratic institutions cannot work properly if inequality becomes too extreme." (Via BBC)

Piketty looks at wealth distribution in countries including the U.S., where the bottom 60 percent of the income bracket have less than 10 percent of the wealth. Piketty says real equality isn't the answer — just less severe inequality. (Via YouTube / politizane)

The economist's work has proven extremely polarizing. Conservatives in Europe and the Americas label it a new Marxism, while progressive economists like Paul Krugman have called "Capital" "a book that will change both the way we think about society and the way we do economics." (Via CNN, The New York Review of Books)

But an article Friday from the London-based Financial Times calls the basis of Piketty's work into question. The FT says its own investigation into Piketty's data found it full of errors and statistical manipulations.

CHRIS GILES: "If you look there, what's circled in red is a formula. But then two is added to it, because the number wasn't high enough, and it didn't seem to fit what he wanted to show in his chart. So, he just added two to it. There's quite a lot of this sort of thing in his spreadsheets."

Now, at the very least, this has meant major schadenfreude from some of his conservative critics. (Via Hot Air

It's also just bad press, plain and simple. But some economists and journalists question whether the Financial Times' criticisms are all that meaningful. 

Matt Yglesias at Vox writes "in most cases ... the actual disagreement doesn't seem very large."

And Slate's Jordan Weissman points out the FT's data and Piketty's basically matches up for some countries, like France, though it does differ quite a bit for the United Kingdom.

Piketty himself responded to FT, in part writing, "I have no doubt that my historical data series can be improved and will be improved in the future (this is why I put everything on line)." (Via Flickr / Parti Socialiste du Loiret)

On Saturday, The Guardian newspaper questioned whether this might kill chances of a Nobel Prize for Piketty. "Capital in the Twenty-First Century" still sits at number one as a New York Times bestseller in hardcover non-fiction.