1. Challenging the Empirical Contribution of Thomas Piketty’s Capital in the 21st Century by Phillip Magness (George Mason University – Institute for Humane Studies) and Robert Murphy (Institute for Energy Research)
Thomas Piketty’s runaway bestseller Capital in the 21st Century has been the subject of intense discussion, both for its bold interpretation of economic history and its provocative policy recommendations. Friends and critics alike have focused on the theoretical apparatus and Piketty’s famous “r>g” mechanism, yet the book’s empirical contributions have received widespread acclaim with only a few exceptions. This has also led many commentators to endorse Piketty’s findings of rapidly surging wealth inequality in Western nations over the past 30 years, with several presenting this rise as a settled empirical fact.
In our paper, we strongly challenge this conventional assessment of Piketty’s work. Piketty’s charts on historical trends in wealth inequality actually show a more pronounced increase than any of his individual data sources. We show that this odd result occurs because of several very dubious and unconventional choices Piketty made while constructing his time series, focusing on the United States example. This includes instances of cherry picking favorable data points, and plugging in gaps without sufficient explanation or annotation. Elsewhere he utilizes a highly distortive assumption about data from the communist world to construct a mid 20th century representation of the world’s capital stock. We note a number of examples of lesser errors as well, including the basic misstatements of easily verified historical facts. While taken alone these smaller errors work to the advantage of specific points in his historical presentation, we believe they are also symptomatic of the larger problems that afflict his main wealth inequality and capital stock charts.
-Phil Magness and Robert Murphy
2. ‘A Diamond is Forever’ and Other Fairy Tales: The Relationship between Wedding Expenses and Marriage Duration by Andrew Francis (Emory University – Department of Economics) and Hugo Mialon (Emory University – Department of Economics)
4. A Quantitative Approach to Tactical Asset Allocation by Mebane T. Faber (Cambria Investment Management)
5. Henry A. Kissinger as Negotiator: Background and Key Accomplishments by James K. Sebenius (HBS Negotiations) and Laurence A. Green (Harvard Business School)