Challenging the Empirical Contribution of Thomas Piketty’s Capital in the Twenty-First Century

Phillip W. Magness

George Mason University – Institute for Humane Studies; George Mason University – School of Public Policy

Robert P. Murphy

Institute for Energy Research

Journal of Private Enterprise, Forthcoming


Thomas Piketty’s Capital in the Twenty-First Century has been widely debated on theoretical grounds, yet continues to attract acclaim for its historically-infused data analysis. In this study we conduct a closer scrutiny of Piketty’s empirics than has appeared thus far, focusing upon his treatment of the United States. We find evidence of pervasive errors of historical fact, opaque methodological choices, and the cherry-picking of sources to construct favorable patterns from ambiguous data. Additional evidence suggests that Piketty used a highly distortive data assumption from the Soviet Union to accentuate one of his main historical claims about global “capitalism” in the 20th century. Taken together, these problems suggest that Piketty’s highly praised and historically-driven empirical work may actually be the book’s greatest weakness.

Challenging the Empirical Contribution of Thomas Piketty’s Capital in the Twenty-First Century

Thomas Piketty’s Capital in the Twenty-First Century (2014) begins with a very bold data claim. The ensuing work, he promises, is “based on much more extensive historical and comparative data than were available to previous researchers, data covering three centuries and more than twenty countries, as well as a new theoretical framework that affords a deeper understanding of the underlying mechanisms” (p. 1) of his subject matter. Though he qualifies this assertion with an acknowledgment of an imperfect and incomplete data set, this concession should not be mistaken for modesty. As Piketty repeatedly reminds his readers over the ensuing 700 pages, it is his unprecedented assemblage of data that supposedly sets his work apart from a literature on wealth inequality that – he contends – frequently suffers from “an abundance of prejudice and a paucity of fact” (p. 2).

When paired with an unconventional theoretical argument rooted in hypothesized “laws of capitalism,” and, perhaps more so, radical policy recommendations in the form of an 80 percent top marginal income tax rate and an annual 5 percent global wealth tax on the biggest fortunes (pp. 512, 530), Piketty’s claim to an empirically robust and data-heavy narrative has always been the strongest ecumenical feature of his work.1 Empirics are also the root of much of the book’s claimed novelty, as well as its self-stated purpose of “patiently searching for facts and patterns and calmly analyzing economic, social, and political mechanisms that might explain them” (p. 3) in order that we might better inform the public discourse about the causes and consequences global wealth inequality.

Data, and more specifically the story in that data – “as extensive as possible a set of historical data” (p. 16) as can be gathered – thus become the main evidentiary tool on which Piketty predicates his work. Indeed, he goes on to extol his own “novel historical sources” and lays claim to a patient, empirically driven search for “facts and patterns” within them twice more before the conclusion of the first chapter (pp. 20, 31-32). While Piketty’s product is part theoretical argument, part empirical exercise, and part prescriptive policy recommendation, its unifying rationalization of is the same: an overarching historical narrative about the characteristics of human wealth accumulation, derived from and purportedly sustained in data.

Given these extensive claims, not to mention the scorn directed toward certain other works in the inequality genre, it might come as some surprise to learn that Piketty’s reported “three centuries” of empirics infrequently predate 1900 beyond a stray data point or two connected by a century’s worth of linear interpolation; that his claimed global analysis only consistently examines three countries – France, Britain, and the United States – with more than passing rigor, with only occasional forays into Sweden and Germany beyond that; or that even many of his 20th century figures, presumably constructed from better records and more readily available data sources, are often products of further interpolation and decennial averaging around multi-year and decade-long gaps.

See full PDF below.

Capital in the Twenty-First Century by Thomas Piketty