Hoo boy. The Financial Times just came out guns blazing with a report claiming that the numbers contained in Thomas Piketty’s Capital in the 21st Century are, well, wrong, and possibly manipulated. Here’s the charge:

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.

Invoking Reinhart and Rogoff—whose famous work on the effects of national debt on GDP growth was undermined, in part, by the world’s most famous Excel spreadsheet error—is a bit bold here. Already, conservative thinker and Slate contributor Reihan Salam says the paper may be “overstating its case.” The FT’s main complaint seems to be that Piketty’s work is based on a patchwork of historical data sources—all of which he has made available online—and in order to smooth the numbers over time, he’s made adjustments they find dubious or inexplicable. In some cases there may even be straightforward transcription errors. Most seriously, they claim, “Some numbers appear simply to be constructed out of thin air.”

But as Matt Yglesias notes, their disagreements about some countries seem fairly minor. Here, for instance, is the data on France, with Piketty’s trend line in blue and the FT’s corrected version in red. In the end, they basically overlap. (You can find this graph, and the FT’s more detailed explanation of its conclusions, here).

However, the paper does level two somewhat serious accusations. First, it says Piketty has covered up a giant gap in America’s historical records on wealth concentration. “There is simply no data between 1870 and 1960,” the newspaper states. “Yet, Prof. Piketty chooses to derive a trend.” This charge is neutered a bit by the fact that Gabriel Zucman and Emmanuel Saez recently released a detailed analysis of U.S. wealth inequality dating back to 1913 that shows an even more dramatic increase than what Piketty found. But Piketty will nonetheless need to spell out how he reached his own conclusions in a bit more detail.



The much more important point of contention is Great Britain. The FT argues that Piketty’s graphs simply “do not match” his underlying data on the UK, and that official estimates show no significant increase in the country’s concentration of wealth since the 1970s.

Once Britain’s corrected data is included in the picture, the FT argues, the evidence that wealth inequality is growing across Europe disappears. Here’s how they envision the rather less dramatic trend lines:



So far, Piketty has only offered a somewhat vague response. It basically boils down to: “This stuff is complicated, but I’m trying to be as transparent as possible.” Here’s the meat of it:

For the time being, we have to do with what we have, that is, a very diverse and heterogeneous set of data sources on wealth: historical inheritance declarations and estate tax statistics, scarce property and wealth tax data, and household surveys with self-reported data on wealth (with typically a lot of under-reporting at the top). As I make clear in the book, in the on-line appendix, and in the many technical papers I have published on this topic, one needs to make a number of adjustments to the raw data sources so as to make them more homogenous over time and across countries. I have tried in the context of this book to make the most justified choices and arbitrages about data sources and adjustments. 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).

It’s a bit early to draw conclusions about the FT’s report. But the disagreement over Britain is jarring. And given that Piketty’s book is seeking to make universal claims about the nature of capitalism, he’s going to need to provide a more detailed rebuttal.