The rich are also different from one another

That is my latest Bloomberg column, here is the introductory section:

The richest Americans are much less likely to have inherited their wealth than their counterparts in many supposedly more egalitarian countries. They’re not remarkably rich in degrees from elite universities. Rich Democrats have more social connections than rich Republicans.

These are some surprising insights from a new study of the very wealthy by Jonathan Wai of Duke University and David Lincoln of Wealth-X, based on data on 18,245 individuals with a net worth of $30 million or more.

The study portrays high-net-worth individuals as a more idiosyncratic and diverse group than reductionist cliches about “the 1 percent” might suggest.

Looking globally, extreme wealth is most closely connected to elite education in South Korea, Chile, and South Africa, and least so in Ukraine and Qatar. The U.S. is near the bottom of the top third of the country rankings for the tightness of this connection. Germany is close to the bottom, reflecting how German paths to riches run through forms of manufacturing and medium-sized business that are not so closely tied to elite higher education.

And:

For all the talk of Sweden and Austria as relatively egalitarian societies, they are also the countries where the greatest proportion of high-net-worth individuals inherited their wealth: 43.8 percent and 49.6 percent, respectively. In the U.S., inherited wealth accounts for only 12.6 percent of the very wealthy individuals in the study’s sample.

There is much more at the link.

Comments

Sign that our "elite education" is neither?

Mood affiliation. Drawing such a conclusion from these results is a massive leap and requires a number of dubious assumptions.

If you want to criticize higher education from elite institutions, there are many better approaches.

I do not conclude. It is a leap. I do not want to criticize higher education from elite institutions.

Sweden's Wallenberg family have owned around 40% of the shares on the country's stock market through Investor AB.

Compare that with American billionaires like Bloomberg, Soros, Sam Walton, Buffet and the rich techies - wealthy through work.

Maybe Mark Zuckerberg is millions of times more meritorious than all his peers, but I find it more likely that he is 2-10 times more meritorious and extremely lucky.

Millian, that's about where I'd put it. Luck is an accelerator to Talent.

Not sure if the equation is T*L or T^L.

The results make more sense if you keep in mind that owners of successful new car dealership probably has a net worth of 30 million. The really rich are people with annual income of 30 million.

30 million is UHNW. Stop moving the bars.

Saez and Zucman estimated that the threshold to be in the top 0.1% of American households in terms of net worth was $20 million. So $30 million is wealthy, yes, but there are over 100,000 households who are just as wealthy or wealthier so it seems a bit much to describe this as "ultra."

What's the measurement for "primarily inherited"? If two folk, one in Sweden and one in the US both inherit 10 million, then the American doubles it while the Swede does not, does the American shift out of the primarily inherited category? Even though like zero people would view him as in any sense a bootstrapper.

Yep - let us take Bill Gates, Harvard drop out, and son of https://en.wikipedia.org/wiki/William_H._Gates,_Sr. and https://en.wikipedia.org/wiki/Mary_Maxwell_Gates

Who just happened to have this in her background - 'She was the first female president of King County's United Way, the first woman to chair the national United Way’s executive committee where she served most notably with IBM's CEO, John Opel, and the first woman on the First Interstate Bank of Washington's board of directors.'

Zuckerberg is another fine example, he of the Westchester County background, as seen in this passage from wikipedia - 'At Ardsley High School, Zuckerberg excelled in classes. He transferred to the exclusive private school, Phillips Exeter Academy, in New Hampshire in his junior year, where he won prizes in science (math, astronomy, and physics) and classical studies. On his college application, Zuckerberg claimed that he could read and write French, Hebrew, Latin, and ancient Greek. He was captain of the fencing team.'

It is not just inherited wealth that makes the difference, as the Chinese know. After all, they do have a term for it - 'Guanxi or Guanshi describes the basic dynamic in personalized networks of influence (which can be best described as the relationships individuals cultivate with other individuals) and is a central idea in Chinese society. In Western media, the pinyin romanization of this Chinese word is becoming more widely used instead of the two common translations of it—"connections" and "relationships"—as neither of those terms sufficiently reflects the wide cultural implications that guanxi describes.' https://en.wikipedia.org/wiki/Guanxi

Sounds like Zuckerberg was just really smart?

This was my question too. If you inherit even 1 million you are far far better off than someone who inherits nothing.

Timely topic: Did Trump inherit his wealth, or is he self made?

True, but if we take Trump as an example (not an endorsement):

He borrowed 1 million from his father, then turned it into a billion. 99% of people with a million from Dad would be worth 100k in 10 years.

He borrowed 1 million from his father, then turned it into a billion.

Evidence?

I find this pretty persuasive that Trump is worth well over a billion dollars: http://www.nytimes.com/interactive/2016/08/20/us/elections/donald-trump-owns-and-owes-debt-properties.html

I certainly think Trump's net worth is in the top half, maybe top 30%, of people who received a similar amount of money from an inheritance or a lottery win or whatever at a similar time.

I don't believe that 99% at all. IMO many would have had or inherited the good sense to invest the bulk of their money.

Where is the documentation fr this?

And even if he borrowed $1 million initially, how much did he inherit later?

And by the way, it's well-known that when one of his casinos was in trouble his father went and bought $3 million in chips which he did not cash, thereby providing a $3 million interest free loan (or gift?).

Bluntly, if Trump wants people to believe his tales of building great wealth by himself he needs to provide evidence. Until then, I'm skeptical.

It's well documented that he received far more than a $1M loan from his father.
http://www.usnews.com/news/articles/2016-10-05/report-donald-trumps-father-floated-millions-in-early-financial-struggles
https://www.washingtonpost.com/news/fact-checker/wp/2016/03/03/trumps-false-claim-he-built-his-empire-with-a-small-loan-from-his-father/
http://www.wsj.com/articles/trumps-father-helped-gop-candidate-with-numerous-loans-1474656573

I call BS. Got real evidence?

This is a great, entertaining article on Europe and inherited wealth. Surprisingly to many, inherited wealth is a much bigger deal in Europe than the US, perhaps because it's so much easier to earn your own wealth in the US.

http://www.bloomberg.com/news/articles/2016-08-23/how-to-stay-rich-in-europe-inherit-money-for-700-years

Also -- perhaps -- because until fairly recently, Sweden and Austria (and other European states and regions) were monarchies and, in some cases, came later to industrialization.

I don't know anyone who thinks Austria is a relatively egalitarian society. We know from first principles that in countries where they tax earnings heavily, inheriting is probably a better route to megawealth than earning. Short of seizing private property, it is not clear how they could resolve that "problem".

Northern Europe is a great place to live but its system is not the best for entrepreneurship and it translates into less people moving from middle class to the class of self made billionaires the US manages to produce in a very unique way.

Whether you're in the USA or Northern Europe your actual chance of becoming a billionaire is still virtually zero, on average.

Yes, unless your IQ is in the top 1%

Even then

Yes, virtually zero on average. With a lot of gifts, loans, other kinds of help, and inheritance of money and of a business-- all from your multimillionaire parents-- your chances greatly increase.

From the last line of the abstract:

"This study provides evidence for the clustering
of brains, wealth and power, and suggests that elite education may matter in the trajectory of developing
expertise in wealth and power generation."

BTW: Although Bill Gates dropped out of Harvard, he got started in programming at an elite prep school.

Well I'm a cuck from Virigina who is upper middle class but likes to think I'm part of the wealthy elite. I prance around my McMansion while I get cucked by the pool-boy.

Probably the % inherited means less than Tyler implies. Sweden has only 48 high net worth individuals, so the margin of error is huge. In Norway there are 40, 20% of them with wealth derived solely from inheritance. For Denmark and Finland the 23% and 9% from inherited wealth respectively.

Many of today's richest people are oilmen who enrich themselves by shoddy work and neglect of basic humanity. They build crappy oil pipelines that rupture and dump toxins into rivers but claim that the public should pay. CEO's like Kelsey Warren of Energy Transfer Partners sic dogs on women and children when they protest pipeline construction. They pollute the Gulf of Mexico and blame everyone but themselves. Their fracking pollutes ground water in six states, and they sue the people who can't drink their own water. Frackers have long known that fracking waste water disposal causes earthquakes, but the deny this and fund state legislators and judges who will let them go on dumping excessive amounts of water into a few disposal wells. They dump spent fracking wastewater out on the ground. Exxon and the Koch Brothers knew for thirty years that fossil fuels cause global warming, but their business model is to deny and fund politicians to protect their lies.

Bernie, is that you?

If you imagine Bernie's voice while reading it, it sure sounds like him.

Bernie Sanders cucked me too!

Herm, thanks for speaking the truth.

And if you are really Bernie, then thanks for dropping by the MR site.

Yeah, it’s obvious that all are different which makes the world such unpredictable. Anyhow, if we wish to be rich in whatever way, it’s something that’s need to be done through determination and never giving up attitude, I am able to do it all nicely with been in a business like Forex trading. This is ever easy with broker like OctaFX; it’s fabulous with mind blowing conditions with small charges through spreads plus there is zero balance protection and 50% bonus on deposit, so it all helps big time.

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