Readers may remember my post from a few weeks ago that mentioned the media response Thomas Piketty’s Capital in the 21st Century has been stirring up. To recap, Piketty’s thesis is that wealth inequality in the United States and Europe is increasing to levels last seen in the aristocratic late 19th century, and this is because capitalist systems provide ever-increasing returns to the owners of capital and not to laborers like you and me.
An investigation by the Financial Times (FT) (login required) has raised some doubts as to the validity of Piketty’s treatment of the data. The whole thing is long and worth your attention, but for those not mathematically—or statistically—inclined, the TL;DR version is that Piketty: 1.) used questionable methods, without providing justification in the index, for estimating/extrapolating data when no official sources were available; and 2) made seemingly arbitrary choices as to which data sources to include when others were available.
FT’s upshot is that Piketty’s conclusion—that capitalism’s natural end-state is high wealth inequality, and that wealth inequality is rising throughout the U.S. and Europe—is thoroughly undermined when other data sources/methods are used. (Piketty’s response was underwhelming; for a fair defense, check out The Economist. Also, here’s a Financial Times follow-up that notes “there were 142 data points and I found problems with 114 of them.” Reach your own conclusions.).
However this ultimately turns out – and you can be sure that this debate is just getting started – one important point cannot be overstated: This is a debate among and for academic economists. Public opinion, whether from Vox.com’s plucky reporters or from the annals of Twitchy, can not tell us anything meaningful about this debate.
I can almost understand why so many left-of-center bloggers and media talking heads rushed to put out their reaction to the book (or to reviews of the book). Along comes an economist who isn’t Paul Krugman, who completely validates your groupthink-reinforced perceptions about wealth inequality. Never mind that 99% of them/us had never heard the name “Piketty” before last month—this guy might finally be the voice to undo 30 years’ worth of Reaganomics!
Arguably, the establishment-Left’s pathological love for educational credentialism and appeals to academic authority meant that Piketty would become their intellectual godhead. It was inevitable. Much like the American Right’s suspicion of political correctness and reverence for tradition has kept Fox News at the top of the cable news ratings for the last decade. Likewise, the cheers from right-leaning punditosphere in the wake of the FT investigation are hardly surprising or unexpected.
And that’s my point. Ideology blinds us to evidence—motivated reasoning and confirmation bias are two well-established quirks of the human mind. They’re so common that we should consider them immutable laws of cognitive computing. Journalists, for all their devotion to truth and justice, are not immune to this either.
It may be a conservative talking point, but there absolutely is a media bias. Megan McArdle (who herself holds all sorts of priors that deviate from standard liberal and libertarian theory) has a great explanation of how bias in the media works. Reporters go into every story with a narrative in their mind already, whether they know it or not. This causes them to ask certain questions, and more importantly, to not even think to ask other pertinent questions.
This is easy enough to guard against as a media consumer so long as you approach every article with the question “What does this reporter assume is true?” What really gets my goat, though, is the assertion by the elites of the “fourth estate” that the problem doesn’t lie with them, but with irrational readers, conservatives, or just plain old politics. Read Ezra Klein’s kick-off essay for Vox.com and try not to have an aneurysm.
The media sets the terms of the public debate, and too many reporters seem unwilling to question or revise their priors. After a month of reading about how “new research” “shows” that “capitalism is fundamentally flawed,” the Piketty/Financial Times dust-up is a good reminder that, in a field where even the experts rarely get it right on the first try, we should be skeptical that any 20-something with the word “contributor” in his job title has anything substantive to say on the matter.