I did not create this video and therefore cannot vouch for the data, but it pretty much matches what I had seen before, based on direct government data, so my guess would be it's not far off. For instance, in 2007, the bottom 40% had 0.2% of the wealth between them, the top 1% had 35%.
Debt should be included in any wealth calculation. However, this is where I am surprised by the graph -the very lowest percentiles should be negative. Austria (not as unequal a country as the US, although fairly unequal for Europe) recently published its wealth study, and the average of the first decile was €-18000. So the curve really should be negative at the lowest rungs -unless debt is not included, but then I'd expect the distribution to be somewhat less unequal.
Another thing that surprises me is that there is a lign for poverty level -but that's an income notion, not a wealth one. Unless someone defined a poverty level for wealth, but I can't find that definition. Similarly, socialism would be the same income for everyone (or rather, according to everyone's need), but not the same wealth: you'd probably accumulate throughout your life and therefore age would be a factor. So there is some confusion with income at some points.
So, the answer is that if anything, the real situation is worse at the very bottom, and the poverty level is merely an indication of how many Americans are below it, but not directly related to the wealth distribution.
So it is scary, yes, because the situation really is.
yeah, judging from the sources the data are a merge (sort of) from both income distributions and wealth distributions.
Debt is important to know if it is included imho because I guess roughly the same distribution should hold for every western country. And thinking about the Netherlands for instance, middle class is heavily indebted.
Now the age could be a skew factor for the accumulated wealth, true, but since there is inheritance I doubt it matters that much.
In any case I think the best way to look at such graphs is seeing the trends rather than the snapshots. And by all means the trends are scary..
I predict new bubbles soon, leading to state bail outs, leading to .. austerity measures and .. unemployment.
It is laughable in some sense, at least if you are not among the unemployed ones.
No, the distribution is far from similar in all western countries. There was a big fuss when it was revealed that the median Italian wealth is twice the median Austrian one (though the average would favour Austria). OK, I can easily be skeptical of official Italian stats, but while the average wealth for the first decile (many would be very recently formed households) of French households was a very low €554 in 2010, the mean for the bottom 25% in the US was $-2100. Negative on average for the entire bottom quarter of the population! It has become even more unequal since the outbreak of the crisis, so the difference would be even greater with 2010 data like France, or more recent still.
Whereas the average top decile wealth were €755,000 and $3,620,000 respectively. Immensely more unequal in the US -and that is in comparison to France, not to Sweden or Finland which are much more equal.
As for the middle class being heavily indebted, if it is for a mortgage that will usually not hurt wealth much as in Europe hardly anyone would have negative equity. Student loans are another matter -they will hurt countries where education is a business.
All in all, I find the snapshot scary enough but, yes, it's getting worse. The US have just become more unequal than in the late 20s, so we're now in uncharted, frontier territory.
This is freaking unreal. Is the data correct?
ReplyDeleteIs debt included?
I reckon that the middle class is more in debt that the upper class, still...
I did not create this video and therefore cannot vouch for the data, but it pretty much matches what I had seen before, based on direct government data, so my guess would be it's not far off. For instance, in 2007, the bottom 40% had 0.2% of the wealth between them, the top 1% had 35%.
DeleteDebt should be included in any wealth calculation. However, this is where I am surprised by the graph -the very lowest percentiles should be negative. Austria (not as unequal a country as the US, although fairly unequal for Europe) recently published its wealth study, and the average of the first decile was €-18000. So the curve really should be negative at the lowest rungs -unless debt is not included, but then I'd expect the distribution to be somewhat less unequal.
Another thing that surprises me is that there is a lign for poverty level -but that's an income notion, not a wealth one. Unless someone defined a poverty level for wealth, but I can't find that definition. Similarly, socialism would be the same income for everyone (or rather, according to everyone's need), but not the same wealth: you'd probably accumulate throughout your life and therefore age would be a factor. So there is some confusion with income at some points.
So, the answer is that if anything, the real situation is worse at the very bottom, and the poverty level is merely an indication of how many Americans are below it, but not directly related to the wealth distribution.
So it is scary, yes, because the situation really is.
yeah, judging from the sources the data are a merge (sort of) from both income distributions and wealth distributions.
ReplyDeleteDebt is important to know if it is included imho because I guess roughly the same distribution should hold for every western country. And thinking about the Netherlands for instance, middle class is heavily indebted.
Now the age could be a skew factor for the accumulated wealth, true, but since there is inheritance I doubt it matters that much.
In any case I think the best way to look at such graphs is seeing the trends rather than the snapshots. And by all means the trends are scary..
I predict new bubbles soon, leading to state bail outs, leading to .. austerity measures and .. unemployment.
It is laughable in some sense, at least if you are not among the unemployed ones.
Anyway, thanks for posting this.
No, the distribution is far from similar in all western countries. There was a big fuss when it was revealed that the median Italian wealth is twice the median Austrian one (though the average would favour Austria).
ReplyDeleteOK, I can easily be skeptical of official Italian stats, but while the average wealth for the first decile (many would be very recently formed households) of French households was a very low €554 in 2010, the mean for the bottom 25% in the US was $-2100. Negative on average for the entire bottom quarter of the population! It has become even more unequal since the outbreak of the crisis, so the difference would be even greater with 2010 data like France, or more recent still.
Whereas the average top decile wealth were €755,000 and $3,620,000 respectively. Immensely more unequal in the US -and that is in comparison to France, not to Sweden or Finland which are much more equal.
As for the middle class being heavily indebted, if it is for a mortgage that will usually not hurt wealth much as in Europe hardly anyone would have negative equity. Student loans are another matter -they will hurt countries where education is a business.
All in all, I find the snapshot scary enough but, yes, it's getting worse. The US have just become more unequal than in the late 20s, so we're now in uncharted, frontier territory.
hmmm yes you are right, most loans should be rather mortgage than consumer.
DeleteInteresting times ahead of us. You know that Chinese curse "May you live in interesting times" don't you :)