1\ I finally read the Piketty paper which has been generating much press for its finding that 60% of US wealth is inherited.
Paper is here:
piketty.pse.ens.fr/files/Alvaredo…
Does it actually offer evidence of the 60% claim? Hardly.
Paper is here:
piketty.pse.ens.fr/files/Alvaredo…
Does it actually offer evidence of the 60% claim? Hardly.
2\ The first 12 pages explain how slippery the concept of "inherited wealth" is, how bad the data are, and how honest researchers looking at the same data can come to numbers anywhere from 0% to 100%
It is particularly clear that data from the US is scanty:
It is particularly clear that data from the US is scanty:
3\ But they soldier on. After 4.5 pages of estimating data for the UK, France, and Germany, they turn to the US.
The US data is so bad that they make a simplifying assumption: where US data is lacking, assume it looks like Europe:
The US data is so bad that they make a simplifying assumption: where US data is lacking, assume it looks like Europe:
4\ Fully two thirds of the US section is caveats about how unreliable the data is
The paper ends with a section titled "Developing better data sources on inheritance", which gives yet more reminders that the data is terrible
The paper ends with a section titled "Developing better data sources on inheritance", which gives yet more reminders that the data is terrible
5\ All this reminds me of Medieval scholasticists arguing about how many teeth a horse has, without thinking to go open a horse's mouth
Indeed, after 18 pages of abstruse mathematical contortions, Piketty argues that it would be "probably harder" just to look at the real world:
Indeed, after 18 pages of abstruse mathematical contortions, Piketty argues that it would be "probably harder" just to look at the real world:
6\ It may indeed be hard to interrogate the Forbes 400 list for meaningful conclusions, but we know a lot about America's richest nevertheless.
75% of the US' 15 biggest fortunes (by dollar) were not inherited:
75% of the US' 15 biggest fortunes (by dollar) were not inherited:
7\ Compare this to Europe, where inheritance and/or stolen wealth is 51% of total:
8\8 Lessons:
Don't assume a paper says what the press says it does
Don't assume a paper says what its own introduction say. A dramatic introductory claim may be undermined by the body of the paper
If a dramatic claim contradicts common sense, your journey has just begun!
Don't assume a paper says what the press says it does
Don't assume a paper says what its own introduction say. A dramatic introductory claim may be undermined by the body of the paper
If a dramatic claim contradicts common sense, your journey has just begun!
