Chris Giles deserves great credit for his careful scrutiny of Thomas Piketty's data, and Piketty also deserves credit for the openness of that data and for his generous response to Chris. Like Justin Wolfers and Paul Krugman, though, I wonder just how damaging Chris's critique is of Piketty's central thesis.

Chris says that, in the UK, "there seems to be little consistent evidence of any upward trend in wealth inequality of the top 1 percent." He points to ONS data showing that the top 1% owned 12.5% of all wealth in 2010-12.

However, this proportion is depressed because house prices are high. These mean that the owner of quite a modest home has substantial wealth which naturally depresses the proportion of wealth held by the really well-off.

If we look only at financial wealth, we see a different picture. The top 1% owns 36.4% of all financial wealth, and the top 10% owns 75.9% (table 2.6b of this Excel file). As the ONS points out, the Lorenz curve for financial wealth is much steeper than that for property wealth. If you believe the ONS is under-counting offshore wealth, inequality is even greater.

This poses the question: should we conflate housing and financial wealth as Chris and Thomas both do? Perhaps not, because housing wealth might not have as much "wealthiness" as financial wealth, in four senses:

1. Is housing net wealth at all? Willem Buiter argued that it isn't, because high house prices are a liability for non-owners who'd like to buy. On this view, the liabilities of non-owners are greater than the ONS estimates and so wealth is more concentrated than it claims.

Housing is only wealth for those planning on trading down - and these are probably a minority of home-owners.

2. Does housing do as good a job as financial wealth in cushioning us from shocks? There are two reasons to think not. One is that housing wealth doesn't protect us from local economic risks. If a big local employer closes down, home-owners might lose their job and see their house price fall. Also, housing doesn't protect us from distribution (pdf) risk. Think of house prices as being capitalized future wage earnings and share prices as capitalized future profits. If there is a permament(ish) shift in income from wages to profits - say because of robotization, globalization (pdf) or other increases in capitalist power - house prices will fall as wages do but share prices will rise. Financial wealth will therefore be a better hedge than housing against a drop in wages.

3.Does housing wealth give us as much freedom as financial wealth? I suspect not, in part because it's lumpier than financial wealth: it's easy to create an income by drawing down financial wealth, but less easy to draw down housing wealth as home equity release schemes are often poor value.

4. Does housing give us political power? To some extent, yes; nimbyism prevents new building, and there's a strong lobby in favour of low mortgage rates (though its power consists in harming the incomes of moderately well-off savers rather than the mega-rich with more diversified portfolios). But on the other hand, it is ownership and/or control of capital that confers power over economic policy-making, for example by being able to demand low taxes or that governments don't damage business "confidence".

My point here is a simple one. Wealth inequality matters because of what wealth does. (For me, one curious omission of Piketty's book is that he doesn't tell us enough about why we should care about inequality.) It's possible that financial wealth does more than housing wealth. If so, it is inequality of this that is more important.