The criticisms of Piketty's historical data were surprisingly technical. Very few economists argued that he fabricated data or that inequality hadn't risen at all. Instead, the debate centered on whether the methods used to construct centuries-long wealth series were reliable enough to support his strongest conclusions.
The main criticisms fell into several categories.
1. Too much interpolation and "filling in the gaps"
Historical wealth records are incomplete.
For many countries, there simply aren't annual observations going back to the 1800s. Piketty and his collaborators therefore had to:
- interpolate between benchmark years,
- splice together different datasets,
- estimate missing observations,
- smooth abrupt changes.
Critics argued that some apparent long-run trends were partly artifacts of these statistical choices rather than directly observed facts.
Piketty's response was essentially that this is unavoidable in historical macroeconomics. You either estimate missing years or you have no long-run series at all.
2. Mixing inconsistent sources
This was perhaps the biggest methodological criticism.
Different periods used different data:
- estate tax records
- inheritance records
- wealth surveys
- national accounts
- household balance sheets
- rich lists
- tax returns
Each measures wealth differently.
For example:
An estate tax record measures wealth at death, while a household survey measures wealth among the living.
Critics argued that stitching these together can introduce structural breaks that resemble real changes in inequality.
3. National wealth versus household wealth
Some economists questioned how Piketty defined total wealth.
Questions included:
- Should government-owned assets count?
- Should pension entitlements count?
- How should public debt be treated?
- How should housing be valued?
Small accounting choices can substantially change measured wealth-income ratios.
4. Housing inflated measured wealth
One important criticism was that much of the increase in wealth reflected rising housing prices rather than expanding productive capital.
For example:
If home prices double while rents barely change,
measured household wealth increases dramatically,
even though productive capacity may not.
Critics argued this meant rising wealth-income ratios did not necessarily imply increasing capitalist power in the way Piketty suggested.
Piketty replied that housing is still a form of capital because it generates housing services and often rental income.
5. The Financial Times controversy
In 2014, journalist Chris Giles at the Financial Times published probably the most famous critique.
He argued that:
- some spreadsheet entries appeared inconsistent,
- some observations were replaced without clear justification,
- some averages were constructed oddly,
- some corrections favored stronger inequality trends.
The criticism attracted enormous media attention because it suggested Piketty's famous graphs might be exaggerated.
Piketty responded publicly by:
- releasing spreadsheets,
- explaining every adjustment,
- arguing that Giles misunderstood several historical datasets,
- showing that most alternative calculations still produced similar long-run trends.
Many economists concluded that although Giles identified some debatable methodological choices, he did not overturn Piketty's broader empirical conclusions.
6. Top wealth shares are hard to estimate
The richest people are precisely those most difficult to measure.
Problems include:
- offshore assets,
- private businesses,
- trusts,
- tax avoidance,
- changing reporting rules.
Because the top 0.1% own so much wealth, small estimation errors can noticeably change measured inequality.
This isn't unique to Piketty—it remains one of the hardest problems in empirical economics.
7. Valuation problems
How should assets be priced?
Consider a family business.
Should it be valued using:
- book value?
- market value?
- discounted future profits?
- tax assessment?
Different valuation methods produce different estimates of wealth concentration.
Historical data often lack enough detail to apply a consistent rule across centuries.
8. International comparability
Countries differ enormously in:
- tax systems,
- property laws,
- inheritance reporting,
- accounting standards,
- financial development.
Critics argued that comparing wealth inequality in, say, nineteenth-century Britain with modern Sweden or the United States inevitably involves difficult harmonization choices.
What happened after the criticism?
One interesting outcome is that the debate led to better data, not abandonment of the research program.
Researchers expanded and refined international databases, incorporating new tax records, national accounts, and household surveys. This collaborative effort has generally reinforced the view that wealth inequality is high and, in many countries, has risen since the late twentieth century, even as particular estimates have been revised.
The current consensus
Today, economists tend to distinguish between Piketty's data and Piketty's theory.
There is fairly broad agreement that:
- His historical data collection was an enormous scholarly contribution.
- Some historical series involve subjective judgment calls and are open to revision.
- Individual country estimates and specific years may change as better evidence becomes available.
- The overall pattern of substantial wealth concentration, and increases in wealth inequality in many advanced economies since around 1980, is supported by multiple independent datasets.
The larger disagreements now focus less on whether wealth inequality has increased and more on why it has increased and whether r > g is the principal mechanism behind that trend. In other words, most of the lasting controversy has shifted from data construction to economic interpretation.
