US Household Wealth Distribution

Started by airboy, August 24, 2014, 07:55:11 AM

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airboy

How wealth is concentrated among segments of the US and developed world is something that gets a lot of talk.

Income distribution is well known and what you report on your income taxes.  Combine that with government checks and you get the cash flow into a household in a year.

Wealth is related to income, but quite different.  Wealth is the value of your assets minus your debts.  Wealth statistics are not as accurate as income data because wealth is harder to measure and wealth is not taxed.  For example, I could tell you what my income was every year for the last 20 years.  My wealth is a partly a function of assets, many of which are difficult to value accurately.  What your house is worth is what someone will actually pay for it - nothing more and nothing less.

The best US data on wealth can be found at:
http://www.census.gov/people/wealth/files/Wealth%20Highlights%202011%20Revised%207-3-14.pdf

and the data comes from a panel of US households - not income tax data:
http://www.census.gov/programs-surveys/sipp/about/Respondent-Information.html

But, since wealth is difficult to measure and the data is gathered from voluntary participation - I strongly doubt if the data is as accurate as US income data.  Wealth is harder to measure than income.

US Wealth dropped from 2001 to 2011 - largely due to the fall in US home prices.  A large percentage of the population has a big proportion of their wealth tied up in their home.  Wealth dropped 7% at the median.  Median US household net worth fell from $73,874 in 2000 to $68,828 in 2011.

If you break the wealth data up into five parts (quintiles) then the data for 2011 is:
First Quintile: -$6,029 (they owe more than they have assets).
Second Quintile: $7,263
Third Quintile: $68,839
Fourth Quintile: $205,985
Fifth Quintile: $630,754

The upper two quintiles increased in wealth from 2001 to 2011, the bottom 3 decreased in wealth.  This is due mostly to increases in the financial markets and decreases in price of single family homes during this period.

But with all of the central banks pumping money into the world economy with wild abandon - the value of financial assets has increased quite a bit.  So if you have more of your assets in financial assets, your wealth went up.  Have more of your assets in your home - your wealth went down.

People tend to gain wealth over the course of their lives.  The wealthiest people in general in the USA are older people.

Having more education is also strongly associated with higher wealth.

A lot of people moan about the wealth of the "top 1%."  But there is no reliable data in the US that provides wealth of any group beyond the quintiles I gave above.  Data on the "1%" is just not there.


Mr. Bigglesworth

I believe you regarding the lack of household data. You have to look at the corporate data.

"The work, to be published in PLoS One, revealed a core of 1318 companies with interlocking ownerships (see image). Each of the 1318 had ties to two or more other companies, and on average they were connected to 20. What's more, although they represented 20 per cent of global operating revenues, the 1318 appeared to collectively own through their shares the majority of the world's large blue chip and manufacturing firms - the "real" economy - representing a further 60 per cent of global revenues.

When the team further untangled the web of ownership, it found much of it tracked back to a "super-entity" of 147 even more tightly knit companies - all of their ownership was held by other members of the super-entity - that controlled 40 per cent of the total wealth in the network. "In effect, less than 1 per cent of the companies were able to control 40 per cent of the entire network," says Glattfelder. Most were financial institutions. The top 20 included Barclays Bank, JPMorgan Chase & Co, and The Goldman Sachs Group."

www.newscientist.com/article/mg21228354.500-revealed--the-capitalist-network-that-runs-the-world.html
"Once more unto the breach, dear friends, once more; "
- Shakespeare's Henry V, Act III, 1598

Mr. Bigglesworth

I'll add a second quote from the article to prevent people from getting the wrong idea.

"Or as Braha puts it: "The Occupy Wall Street claim that 1 per cent of people have most of the wealth reflects a logical phase of the self-organising economy."

So, the super-entity may not result from conspiracy. The real question, says the Zurich team, is whether it can exert concerted political power. Driffill feels 147 is too many to sustain collusion. Braha suspects they will compete in the market but act together on common interests. Resisting changes to the network structure may be one such common interest."
"Once more unto the breach, dear friends, once more; "
- Shakespeare's Henry V, Act III, 1598

airboy

Quote from: Mr. Bigglesworth on August 24, 2014, 01:36:35 PM
I'll add a second quote from the article to prevent people from getting the wrong idea.

"Or as Braha puts it: "The Occupy Wall Street claim that 1 per cent of people have most of the wealth reflects a logical phase of the self-organising economy."

So, the super-entity may not result from conspiracy. The real question, says the Zurich team, is whether it can exert concerted political power. Driffill feels 147 is too many to sustain collusion. Braha suspects they will compete in the market but act together on common interests. Resisting changes to the network structure may be one such common interest."

Read the analysis you posted.  It does not mean what you think it means.  The "analysis" looks at who is sitting on boards of directors.  The members of Boards have almost no actual stock ownership of companies.

Boards also do not exert day-to-day control over companies.  Boards usually look at very long term policy.

In the USA, the biggest stock owners are retirement funds and broad based stock index funds.  There is not some mythical ownership of 1% who control all of the major companies.

To look at corporate data, you must look at who actually owns the voting shares of the company.  Again, the biggest owners are retirement funds and stock index funds.  Stock index funds are passive investors.  One index fund group, Vanguard, has more than $3 trillion in financial assets.

It is maddening to read conspiracy theory stuff in the financial sector that is easily disproved by even the most basic undergraduate business student understanding of how financial markets work and how large corporations are structured.

Mr. Bigglesworth

"Once more unto the breach, dear friends, once more; "
- Shakespeare's Henry V, Act III, 1598

airboy

Quote from: Mr. Bigglesworth on August 24, 2014, 08:52:28 PM
I think you have read the wrong paper.

http://arxiv.org/PS_cache/arxiv/pdf/1107/1107.5728v2.pdf

Read that paper.  Data source is completely opaque.  It was "self-published" three years ago.  The manuscript has not undergone peer review.
Furthermore, US corporations as a group are not stock-holding empires of other publically traded companies like you have had in Korea and Japan on occasion.

In sum, I don't think that this paper prooves your point either.

Mr. Bigglesworth

"Once more unto the breach, dear friends, once more; "
- Shakespeare's Henry V, Act III, 1598

LongBlade

Not sure if this belongs under household income or some other thread, but it's worth noting:

QuoteThe housing market can contribute nearly 20 percent to gross domestic product when it's humming along, but excessive home borrowing and the subsequent overheating of the housing market got the American economy into such trouble in the first place. So instead of policies meant to boost home buying, Blyth and Lonergan contend the Federal Reserve should instead give money directly to people. For the trillions already doled out to the financial sector via those "quantitative easing" asset purchases, every family in America could have been on the receiving end of $56,000. The result, the authors contend, would be an economic boost fueled not by re-inflating the housing market but by consumer spending, which accounts for nearly 70 percent of America's GDP.

source: https://finance.yahoo.com/news/instead-qe-fed-could-given-094500275.html
All that is gold does not glitter,
Not all those who wander are lost;
The old that is strong does not wither,
Deep roots are not reached by the frost.

Airborne Rifles

Hmm. I'd use that $56k to pay down my mortgage. How does that factor in to the equation I wonder?

DoctorQuest

Quote from: LongBlade on September 18, 2014, 02:16:14 PM
Not sure if this belongs under household income or some other thread, but it's worth noting:

QuoteThe housing market can contribute nearly 20 percent to gross domestic product when it's humming along, but excessive home borrowing and the subsequent overheating of the housing market got the American economy into such trouble in the first place. So instead of policies meant to boost home buying, Blyth and Lonergan contend the Federal Reserve should instead give money directly to people. For the trillions already doled out to the financial sector via those "quantitative easing" asset purchases, every family in America could have been on the receiving end of $56,000. The result, the authors contend, would be an economic boost fueled not by re-inflating the housing market but by consumer spending, which accounts for nearly 70 percent of America's GDP.

source: https://finance.yahoo.com/news/instead-qe-fed-could-given-094500275.html

I certainly am no expert but I've often wondered if this was not the case. Big business is all well and good but if you add up all us little folks you have a good chunk of change powering the economy.
"Everything you read on the internet is true." - Benjamin Franklin

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"I reject your reality and substitute my own." - Adam Savage, inventor of the alternative fact.

LongBlade

Quote from: Airborne Rifles on September 18, 2014, 03:48:11 PM
Hmm. I'd use that $56k to pay down my mortgage. How does that factor in to the equation I wonder?

Well, let's pretend here for a moment.

Average housing price is ~$200,000. Say you've managed to pay darn near a quarter of that off, so you owe $150,000. You take $50,000 and pay that off, then turn around to the bank and tell them you want to refinance. I'm not going to run the NPV numbers, but let's take a wild guess and say you've managed to half your monthly mortgage bill. Say from $1200 to $650 or something.

Whatcha gonna do with all that extra cash? Methinks the economy would take off quite nicely.
All that is gold does not glitter,
Not all those who wander are lost;
The old that is strong does not wither,
Deep roots are not reached by the frost.

Airborne Rifles

To quote one of my favorite musicals, "if they would agree, I would agree."  ;)

GDS_Starfury

that was almost the exact place that I was in when the market collapsed and the bank basically said to fuck off on the refinance.
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Banzai Cat - There is no "partial credit" in grammar. Like anal sex. It's either in, or it's not.

Mirth - We learned long ago that they key isn't to outrun Star, it's to outrun Gus.

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Mr. Bigglesworth

Quote from: LongBlade on September 18, 2014, 02:16:14 PM
Not sure if this belongs under household income or some other thread, but it's worth noting:

QuoteThe housing market can contribute nearly 20 percent to gross domestic product when it's humming along, but excessive home borrowing and the subsequent overheating of the housing market got the American economy into such trouble in the first place. So instead of policies meant to boost home buying, Blyth and Lonergan contend the Federal Reserve should instead give money directly to people. For the trillions already doled out to the financial sector via those "quantitative easing" asset purchases, every family in America could have been on the receiving end of $56,000. The result, the authors contend, would be an economic boost fueled not by re-inflating the housing market but by consumer spending, which accounts for nearly 70 percent of America's GDP.

source: https://finance.yahoo.com/news/instead-qe-fed-could-given-094500275.html

I said at the time that regular people should get their taxed paid, back, instead of giving the money to the banks. Something like the last 3 years paid. I doubt I am the first to think of it. Why is it not done? Because the current financial system is about controlling people economically. The mighty few can only get power when everyone is in debt. People think they are free, they are not. Does GDP suffer if people are not forced to work for others? Yes, significantly. Is GDP what a country is about? No. People need to wake up.
"Once more unto the breach, dear friends, once more; "
- Shakespeare's Henry V, Act III, 1598