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Title: The One-Percent across Two Centuries: A Replication of Thomas Piketty's Data on the Concentration of Wealth for the United States
Citation Type: Journal Article
Publication Year: 2017
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Abstract: This exercise reproduces and assesses the historical time-series on the top shares of the wealth distribution for the United States presented by Thomas Piketty in Capital in the Twenty-First Century. Piketty's best-selling book has gained as much attention for its extensive presentation of detailed historical statistics on inequality as for its bold and provocative predictions about a continuing rise in inequality in the twenty-first century. Those predictions were derived and justified by reference to the historical data, so it is helpful to assess the robustness of the historical evidence presented. Here I examine Piketty's U.S. data for the period 1810 to 2010 for the top ten percent and the top one percent of the wealth distribution. I conclude that Piketty's data for the wealth share of the top ten percent for the period 1870-1970 are unreliable. The values he reported are manufactured from the observations Page 2 for the top one percent inflated by a constant 36 percentage points. Pikettys data for the top one percent of the distribution for the nineteenth century (1810-1910) are also unreliable. They are based on a single mid-century observation that provides no guidance about the antebellum trend and only tenuous information about trend in inequality during the Gilded Age. The values Piketty reported for the twentieth century (1910-2010) are based on more solid ground, but have the disadvantage of muting the marked rise of inequality during the Roaring Twenties and the decline associated with the Great Depression. The reversal of the decline in inequality experienced during the 1960s and 1970s and the subsequent sharp rise in the 1980s are hidden by a twenty-six-year interpolation. This neglect of the shorter-run changes is unfortunate because it makes it difficult to discern the impact of policy changes (income and estate tax rates) and shifts in the structure and performance of the economy (depression, inflation, executive compensation) on changes in wealth inequality. This paper offers an alternative picture of the trend in inequality based on newly available data and a reanalysis of the 1870 Census of Wealth. This article does not question Piketty's integrity.
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Authors: Sutch, Richard
Periodical (Full): Social Science History
Issue: 4
Volume: 41
Pages: 587-613
Data Collections: IPUMS USA
Topics: Aging and Retirement, Other
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