Link to article: Be Skeptical of Both Piketty And His Skeptics
Data never has a virgin birth. It can be tempting to assume that the information contained in a spreadsheet or a database is pure or clean or beyond reproach. But this is almost never the case. All data is collected and compiled by someone — either an individual researcher or a government agency or a scientific laboratory or a news organization or someone or something else. Sometimes, the data collection process is automated or programmatic. But that automation process is initiated by human beings who write code or programs or algorithms; those programs can have bugs, which will be faithfully replicated by the computers.
This is another way of saying that almost all data is subject to human error. It’s important both to reduce the error rate and to develop methods that are more robust to the presence of error.1 And it’s important to keep expectations in check when a controversy like the one surrounding the French economist Thomas Piketty arises.
Piketty’s 696-page book “Capital in the Twenty-First Century” has become an unlikely best-seller in the United States. That’s perhaps because it was published at a time when there is rapidly increasing interest in the subject of economic inequality in the U.S.2 But on Friday, the Financial Times’ Chris Giles published a list of apparent errors and methodological questions in the data underpinning Piketty’s work. Piketty has so far responded to the Financial Times only in general terms.
My goal here is not to litigate the individual claims made by Giles; see The New York Times’ Neil Irwin or The Economist’s Ryan Avent for more detail on that. Rather, I hope to provide some broad perspective about data collection, publication and analysis.
Related quote from Charlie Munger when asked about Piketty, after stating that he doesn't agree with him (45-46 minute mark, HERE): "I think he's full of air."