Thomas Piketty, a French economist, has become somewhat of a minor celebrity in recent weeks following the release of his best selling book “Capital in the Twenty-First Century.” In the book, he examines 200 years of economic policy and makes the case for higher taxes.
Over the last few weeks, however, some of his numbers have been called into question because of poorly constructed spreadsheets. A recent article from Breaking Views, a financial insight blog, makes the case that whenever you are creating such a data heavy report, there are going to be some errors.
According to Richard Beales, the author of the piece, Piketty deserves credit for making background data available. However, the sloppy way that the Excel spreadsheets were put together has become the basis for the criticism of the book.
“The Frenchman’s spreadsheets would, in places, embarrass the greenest investment-banking analyst,” Beales wrote. “Exhibit A is his habit of hard-coding adjustments into Excel formulas.”
He goes on to examine several different areas where the formulas of the spreadsheets were incorrectly used. Many spreadsheet experts noticed that individual inputs were not shown, making it more complicated to follow logic and identify potential issues. However, Beales concludes that the problems found in the report are not enough to undermine the main points that the report is making.
While few businesses are putting out projects the size of Piketty’s book, the data that is placed in their spreadsheets is still important. With the help of an Excel consultant, any businesses will be able to ensue their spreadsheets are as effective as possible.