Thomas Piketty’s book ,Capital in the Twenty-First Century
, has been the publishing sensation of the year. Its thesis of rising inequality tapped into the zeitgeist and electrified the post-financial crisis public policy debate.The data underpinning Professor Piketty’s 577-page tome, which has dominated best-seller lists in recent weeks, contain a series of errors that skew his findings. The FT found mistakes and unexplained entries in his spreadsheets, similar to those which last year undermined the work on public debt and growth of Carmen Reinhart and Kenneth Rogoff.
The central theme of Prof Piketty’s work is that wealth inequalities are heading back up to levels last seen before the first world war. The investigation undercuts this claim, indicating there is little evidence in Prof Piketty’s original sources to bear out the thesis that an increasing share of total wealth is held by the richest few.
Prof Piketty, 43, provides detailed sourcing for his estimates of wealth inequality in Europe and the US over the past 200 years. In his spreadsheets, however, there are transcription errors from the original sources and incorrect formulas. It also appears that some of the data are cherry-picked or constructed without an original source.
Read the rest here.
Is anyone with an IQ over 40 surprised by this?
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ReplyDeleteContacted by the FT, Prof Piketty said he had used “a very diverse and heterogeneous set of data sources ... [on which] one needs to make a number of adjustments to the raw data sources." cos if the raw data sources point to nothing much or some other conclusion than one which one might prefer, then of course they will need 'adjusting'.
A Series of Data Errors in Geithner’s Book
ReplyDeleteStress Test: The Indictment of Timothy Geithner
The Fed and the Treasury held all the cards in dealing with the financial industry. Any firm that was publicly cut off from access to special Fed lending facilities, and denied Treasury, Fed, or FDIC loans or guarantees, would have soon been toast in the crisis atmosphere of this period.
Conclusion
Anyone reading the book will have little doubt that it is the bankers who ultimately enjoy Geithner’s sympathy. Based on a study of bankers’ home buying behavior he tells us that they were not acting criminally, but rather were caught up in the irrational exuberance of the housing bubble, as though these were mutually exclusive possibilities. It is likely that many of the top criminals in Enron ultimately believed in the company’s business model. That doesn’t mean they didn’t break the law. In the same vein, bankers may have knowingly issued and securitized hundreds of thousands of fraudulent mortgages even if they believed that ever rising house prices would make every mortgage a good mortgage.
Geithner also briefly comments on the efforts of Erskine Bowles and formers Senator Alan Simpson to craft a deficit reduction package. He says the effort to have the government live within its means is “a fight worth having.” Given that the major problem now and for the foreseeable future is a lack of aggregate demand, and therefore a government deficit that is too small, many might think that educating the public on the relationship between the deficit and demand and employment is a fight worth having, but not Timothy Geithner.
The reality is that we had a completely preventable economic disaster hit the country. The result was millions of people losing their homes and/or their jobs, in many cases seeing their lives and the lives of their children ruined. With almost no exceptions the policy makers responsible for the disaster and the bankers who profited from it are doing just fine. And Timothy Geithner can’t understand why everybody isn’t happy.
http://my.firedoglake.com/deanbaker/2014/05/24/stress-test-the-indictment-of-timothy-geithner/