Friday, May 30, 2014

While I Contemplated Writing 700,000 Words On Piketty, The FT's Money Supply Came Back Swinging

This whole thing could have been avoided with a little peer review but no; Piketty had to write a book and commenters had to comment without the least bit of effort beyond turning the pages.

I swear economists have to be the most worthless, most self-absorbed bunch of scamsters one is likely to run into.

So there I was, gathering my thoughts, such as the above, for the 700K word comment when Chris Giles drops out of one of the feedreaders.
From Money Supply:

Capital in the 21st Century – a response
Professor Thomas Piketty has given a more detailed response to the Financial Times articles and blogs on his wealth inequality data in Capital in the 21st Century (here, here, here and here). He says it is “simply wrong” to suggest he made errors in his data.

There are a few things on which we agree. First, the source data on wealth inequality is poor. I have written that it is “sketchy” and Prof Piketty says it is “much less systematic than we have for income inequality”. Second, it would have been preferable for Prof Piketty to have used a more sophisticated averaging technique than a simple average of Britain, France and Sweden to derive an estimate for European wealth inequality. Third, the available data suggests a broad trend of reduction in wealth inequality during most of the 20th Century.

There are more aspects on which there remains disagreement. Prof Piketty does not explain the multiple missing data points in his data or tweaks to it; he explains transcription errors as deliberate adjustments to overcome discontinuities in data, but does not provide formulas or an explanation of why these undocumented adjustments should apply to only one data point in a time series; he does not explain why it is consistent to favour household surveys over estate tax records for the US but not the UK; nor why his UK series showing rising wealth inequality differs so materially from his source materials, which show falling UK wealth inequality in eight of the most recent nine decades....MORE