I think what this story actually is, is a reminder that just because something is based on quantitative data, that doesn't make it 'objective' or automatically 'truth'.
Quantitative analysis rests on so many choices, as to how to measure, what measurements to use, what statistical formula to use, how to interpret what they say. Each of those choices can be mistaken -- _or_, even more troubling to the worldview that quantitative==objective truth, be subject to debate among reasonable and well-intentioned people about the best choices to make and the implications thereof.
I'm not saying it means there is no 'truth', and all research conclusions are equally valid. I'm saying that research conclusions based on quantitative data, no less than those based on qualitative information, are subject to debate and argument, not physical objective material reality simply because there were measurements and numbers involved.
The tl;dr version is that knowledge (even "hard" scientific knowledge) cannot be meaningfully acquired by a single person independent of a community that makes common assumptions, since going to very first principles for even the simplest analysis is totally unwieldy. Take something like simple genetics — we rely on the testimony of a lot of people just to accept the utility of a basic Punnett square.
I much preferred Summer's assessment of Piketty to FT's: he was measured and responsible in his criticism, and correctly noted that it'll take years for serious academics to sift through the merit of the book. Alas, responsible discussion is hard to come by when it comes to data that challenges peoples' closely-held values.
This data is not even big: to paraphrase a joke I read on HN recently, you could do the analysis in Excel and it wouldn't even crash.
There is something to be said for systematically gathering a lot more data than governments collect now, especially income and wealth data in this case. Not because it benefits anyone economically right now, but because without collecting it now, it is that much harder to reconstruct it later.
The real problem with collecting data like this is that there's no real good source of it. Most of what you get has selection bias, and the other stuff you can get is riddled with holes. And then you try to do it across countries, where definitions change and governments college disparate data at differing granularities and it just gets...frustrating.
An economist's toughest job is finding good data. The analysis is the easy part!
Consider the debate on climate change, 98% of climate scientists agree that humans contribute significantly to climate change, but large numbers of Americans (including some of the most powerful politicians and talk-radio hosts) either deny climate change or claim that humans don't do much to cause climate change.
I expect the inequality debate to play out in a similar fashion. Many economists may agree with Piketty. However, the FT has thrown sufficient "doubt" on his findings (it doesn't matter that they compare past tax data with today's "survey" data etc).
This "doubt" provides sufficient ammunition for those who'd like to deny that inequality is on the increase. So the debate will end up as another one of those "he said, he said" topics in the media and people are likely to take sides based on which side of the ideological divide they are one.
http://www.econ.nyu.edu/user/debraj/Papers/Piketty.pdf http://aida.wss.yale.edu/smith/piketty1.pdf http://economistsview.typepad.com/economistsview/2014/05/unp...
In brief, his theoretical mechanisms that supposedly predict and explain greater wealth accumulation are actually unsound, and if anything this seems to be the evolving consensus among economists who study the area.
You might just as well suggest that paleontology is entangled with religion because its findings offend some people's religious views.
To this day, people in politics are still having arguments about the relationship between inflation and fed interest rates, two of the most easily-observed quantities in the economy. Imagine what the inequality debate will be like in comparison.
The thing about inequality is that it's so shockingly close* to a lognormnal/Pareto distribution that my feeble brain says "biology!" and I stop thinking of it as a problem. It starts to feel to me like when I used to argue with algebra if I don't.
*I cut & pasted some data set from the Internet and the r-squared was way above 0.9
And apparently, if you read enough semantics that aren't really there into history, it looks like the best cure for inequality is to simply stop everything and have World War II again. Cures Depressions, too!
We could not engineer a proper monetary policy, so we sacrificed one in 25 of the world's population instead. And this worked!
Whilst "many" economists most surely do agree with Piketty's data, it is closer to 50-50 than the 98% found in climate science.
Additionally, the number of economists who agree with Piketty's data but disagree with him over it's implications (that's the important part) will be smaller still.
Except when the man on the talk radio blames it on "inept Big Government" or "excessive taxation". Then it's super-easy.
That's ridiculous, and just proves the point of the comment you were replying to.
I am equally surprised anyone is repeating the myth of consensus myth: http://www.salon.com/2014/05/28/wsjs_shameful_climate_denial...
"Why do people persist in believing things that just aren't true?"
http://www.newyorker.com/online/blogs/mariakonnikova/2014/05...
HN thread about it: https://news.ycombinator.com/item?id=7769266
a 44% wealth share for the top 10% (and a 12.5% wealth share for the top 1%, according to the FT) would mean that Britain is currently one the most egalitarian countries in history in terms of wealth distribution; in particular this would mean that Britain is a lot more equal that Sweden, and in fact a lot more equal than what Sweden as ever been (including in the 1980s). This does not look particularly plausible
Shame on the FT.
Right.
Shame on you.
I can't imagine any good comeback from them to Pikettys comeback.
"That's a very brave proposal" -> "You're utterly mad".
The first of two substantive changes the FT notes that greatly changes Pikettys European wealth trend would be the wealth estimate for Britain.
The FT choose a Fig of 44% they have got from a wealth survey carried out by the ONS (Britains govt statistical office) - compared to Pikettys 71%.
The 71% is from estate tax data from Britains tax authorities (HMRC) and is the same method used for the whole time-series.
The FT take that historical time-series then drop the 44% ONS figure in for the most recent time points.
So according to FT methods - Britain unlike the US and the rest of Europe has had declining inequality throughout its period of Thatcherite financial deregulation.
This is just stupid.
The second substantive difference the FT note is that Piketty should weight the 4 European series Britain, Sweden, France, Germany by the size of their economies rather than a straight average.
He could but it only makes difference to the overall European trend if you accept their crazy estimate of declining British inequality. Otherwise Briatin is similar to the other 3 and it make no difference.
Thats about the main points.
Scott Winship, a scholar at the Manhattan Institute who disputes Mr Piketty's overarching narrative about inequality wrote on Twitter last night: "I’ve spent time with Piketty U.S. wealth ineq[uality] spreadsheet and LOTS of time with his income data. He’s not up to funny business."
>He says the newspaper’s analysis rests on apples-to-oranges comparisons of past data from tax returns mixed with current data from surveys, which makes the conclusions they reach deeply flawed, and contrary to what a wide range of other studies have found.
