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Piketty's Findings Undercut by Errors

ft.com

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Re: Piketty's Findings Undercut by Errors

#21

Post by thanatropism »

greenyoda wrote: post #11
thanatropism wrote: post #7

In Piketty's credit, he did make this easy. Providing data for reproducibility and replicability is relatively new in economics. There are, however, two kinds of claims here. One is that mistakes were made, which is grounds for schadenfreude for those (like me!) who don't like the slight jumps in reasoning from "inequality is rising" to "something must be done about inequality" to "this is what must be done". For all…

"But secondly, it is claimed that he cherry-picks. Economists (we) do that. A lot. And it has to be called out." The total effect of his cherry picking can't even be discerned from this article. With a lot more work (more than a single blogger probably has time for), it might be shown to be much worse. For example, Piketty chose the U.K., France and Sweden for his list of European countries (averaging them all into "…

Related, useful concept:

https://en.wikipedia.org/wiki/Simpson%27s_paradox

See in particular the Berkeley Gender Bias case if you don't want to hack the math apart.

The specific way you slice and dice data matters.

Re: Piketty's Findings Undercut by Errors

#22

Post by 001sky »

hkmurakami wrote: post #5

Lawrence Summers' review/criticism of Piketty's tome is worth a read, even for non Summers' fans (in general I mildly disfavor Summers, but I appreciated this piece). "Piketty’s timing may be impeccable, and his easily understandable but slightly exotic accent perfectly suited to today’s media; but make no mistake, his work richly deserves all the attention it is receiving. This is not to say, however, that all of it…

The focus on the balance sheet and not just the P&L is important. Unless these are incredibly flawed analyses--rather than minor nitpicks--the main contributions seem to be seminal none-the-less.

Re: Piketty's Findings Undercut by Errors

#23

Post by Iv »

zaroth wrote: post #4

The more substantive article on ft.com is here: http://blogs.ft.com/money-supply/2014/05/23/data-problems-wi... This shows the actual errors, correcting for the errors, and the new results. If you get an unauthorized popup, search on Google and click the top link: https://www.google.com/search?q=data-problems-with-capital-i...

Thanks a lot. It is annoying that we can't see Piketty's answer without this popup.

I seriously hate the way this has been reported. No one seems to care about the facts or numbers. All news seem to be "The commie was wrong!" without even trying to explain what the criticism is about.

When I see the FT)reconstructed charts, I have a hard time accepting the notion that his errors were significant. He himself explains that he tries to track a quantity that is hidden from public view by using several indirect indicators. It is doomed to be approximate, but I don't see anything like a contradiction in this article. Just a mere correction.

Re: Piketty's Findings Undercut by Errors

#24

Post by Iv »

greenyoda wrote: post #11
thanatropism wrote: post #7

In Piketty's credit, he did make this easy. Providing data for reproducibility and replicability is relatively new in economics. There are, however, two kinds of claims here. One is that mistakes were made, which is grounds for schadenfreude for those (like me!) who don't like the slight jumps in reasoning from "inequality is rising" to "something must be done about inequality" to "this is what must be done". For all…

"But secondly, it is claimed that he cherry-picks. Economists (we) do that. A lot. And it has to be called out." The total effect of his cherry picking can't even be discerned from this article. With a lot more work (more than a single blogger probably has time for), it might be shown to be much worse. For example, Piketty chose the U.K., France and Sweden for his list of European countries (averaging them all into "…

> But why those particular countries

Because they had coherent archives of several proxies that Piketty uses for a long period of time. He opened the door to people doing the same work he did and contradicting him with other countries, but I would not bash him for not doing the same work on every country on the planet.

Re: Piketty's Findings Undercut by Errors

#25

Post by Tycho »

pdabbadabba wrote: post #13
mchusma wrote: post #12

Earlier quoted context omitted.

I liked your point, which is similar to my reaction to the book. Part 1: "Relative inequality is rising" Step 2: "?" Step 3: "Policy proposals" Most notably, Piketty never made a case why his policy proposals are the best way to improve the lives of the bottom 50% on an absolute basis.

Have you read the book? It is clearly not his focus (or area of expertise!) but the book makes its premise clear: extreme inequality is inconsistent with the meritocratic ideals upon which modern capitalist democracies are founded, and can lead to social unrest. This is close to a direct quotation from the book's introduction --0 I would quote it exactly if I had the book in front of me right now. Maybe you don't agr…

How is the answer to raise all boats 'no'?

Re: Piketty's Findings Undercut by Errors

#26

Post by pdabbadabba »

Tycho wrote: post #25
pdabbadabba wrote: post #13

Earlier quoted context omitted.

Have you read the book? It is clearly not his focus (or area of expertise!) but the book makes its premise clear: extreme inequality is inconsistent with the meritocratic ideals upon which modern capitalist democracies are founded, and can lead to social unrest. This is close to a direct quotation from the book's introduction --0 I would quote it exactly if I had the book in front of me right now. Maybe you don't agr…

How is the answer to raise all boats 'no'?

You're right, I was imprecise. Piketty does not claim (I don't think) that capitalism doesn't raise all boats, only that capitalism and increased productivity do not raise all boats equally.

Re: Piketty's Findings Undercut by Errors

#27

Post by fiatjaf »

_broody wrote: post #15
fiatjaf wrote: post #8

There are a lot of problems, they have been pointed by economists on every side of the spectrum right now, few months after the book has been published. More errors will be pointed during the years, but all the criticisms will be ignored, Piketty will be remembered as a genius for the time being and his ideas will be teached in schools and universities as if they were the God's words. Just like happened with Keynes.

And Hitler. Let's not forget to bring up parallels to Hitler when trying to smear up someone. Godwin's law must be fulfilled, damn it! I don't see "criticisms being ignored." The author is dialoguing with his critics. His response was published in this very article.

Keynes also dialogued. I'm not saying the criticisms will be ignored by the author, but by the "specialists" of the future.

Re: Piketty's Findings Undercut by Errors

#28

Post by fiatjaf »

jokoon wrote: post #17
fiatjaf wrote: post #8

There are a lot of problems, they have been pointed by economists on every side of the spectrum right now, few months after the book has been published. More errors will be pointed during the years, but all the criticisms will be ignored, Piketty will be remembered as a genius for the time being and his ideas will be teached in schools and universities as if they were the God's words. Just like happened with Keynes.

if he's wrong in 50 years, and still talked about, he will still matter for a simple reason: if a bad idea is popular, you need to implement it and make it fail to prove it's a bad idea. you just learn by your errors. It's better than to not experiment at all. economics and policy are influenced by history. sometimes you have to find arguments in economics that manage to change politics even if it's not an entirely g…

Well, Keynes is still wrong, and still talked about, and it was tested many times, failed them all, but, as economics is not testable, nobody can ever be convinced of anything, anyone can interpret the reality in the way he likes most and say it is proving your point.

Re: Piketty's Findings Undercut by Errors

#29

Post by jokoon »

fiatjaf wrote: post #28
jokoon wrote: post #17

Earlier quoted context omitted.

if he's wrong in 50 years, and still talked about, he will still matter for a simple reason: if a bad idea is popular, you need to implement it and make it fail to prove it's a bad idea. you just learn by your errors. It's better than to not experiment at all. economics and policy are influenced by history. sometimes you have to find arguments in economics that manage to change politics even if it's not an entirely g…

Well, Keynes is still wrong, and still talked about, and it was tested many times, failed them all, but, as economics is not testable, nobody can ever be convinced of anything, anyone can interpret the reality in the way he likes most and say it is proving your point.

that doesn't mean we should not try anything.

Re: Piketty's Findings Undercut by Errors

#30

Post by fiatjaf »

al2o3cr wrote: post #16
fiatjaf wrote: post #8

There are a lot of problems, they have been pointed by economists on every side of the spectrum right now, few months after the book has been published. More errors will be pointed during the years, but all the criticisms will be ignored, Piketty will be remembered as a genius for the time being and his ideas will be teached in schools and universities as if they were the God's words. Just like happened with Keynes.

Or with Reinhart & Rogoff, who made a "mistake" in Excel that helped push disastrous austerity all over the world with a 90% debt-to-GDP cliff that didn't actually exist...

Reinhart & Rogoff are just technocrats that will be forgotten in two or three years.
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