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Serious doubts emerge about data used in Thomas Piketty's Capital

In what could amount to a bombshell report, Chris Giles of The Financial Times claims that the data underlying Thomas Piketty's Capital in the Twenty-First Century is bunk. If true, that would mean that Piketty's entire theory of income inequality — which has made the French economist a virtual rock star on the left and pushed his book to the top of the bestseller lists — is incorrect. From Giles:

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. [FT]

Giles compares the flaws to rudimentary spreadsheet errors in the work of Carmen Reinhart and Kenneth Rogoff, which led to the collapse of a theory, often cited by budget hawks, that high levels of debt automatically result in slow economic growth.

For those versed in economics, Giles has a more detailed rundown here. The FT has also run a response from Piketty himself. Stay tuned...