Of course people in US are very wealthy if you are looking at dollar amounts. It would be impossible for cost of living to be this high, without a lot of people having decent amount of wealth.
But people's perception of their own wealth depends way more on relative value of their wealth compared to cost of living. If you live in a city where some shitty 2 bedroom apartments cost 1m$+, you aren't going to feel all that rich even if you have 10 million dollar net worth.
Seems fringe and out of touch with my reality and everyone I know. Does anyone have any info on who the author is and what sorta school of though he's involved with?
I was born and grew up in the states and am living outside the country (near Europe) and the smallest things made me realize how truly rich Americans are compared to the rest of the world, in real terms. Even things like fast food or Walmart are a testament to the abundance the US has (not saying it is right or wrong). And these systems are supported by the simple fact you just have a lot of rich people walking around relative to the global population.
To put it more succinctly, I know engineers/lawyers/doctors in this country I’ve been living in that make 2k a month and it’s good. They work hard, it’s stressful. A fast food worker in the US can make $15/hr and bring in 2.4k a month.
The chart there is deceptive—to be fair, we should be showing 1 and 5 percentile as well. Saying “walking around a mall you might encounter a few decamillionaires” is shifting focus from the fact that 1 in 10 people are experiencing near zero net worth and the bottom 1 percentile likely are suffering way more than the top 1 percent are enjoying their riches.
Wow, there's so much wrong with this "statistical analysis" to the point of absurdity. Goes to show that even a 30-year economics professor can be duped by AI.
The numbers are broken, a more accurate measure would have been median rather than average.
People work because they dont have or need more money to survive.
Reality will tell you if people need to work as many hours and as many jobs, they must be struggling. This is also true of many western and other so called rich countries.
Looking at a generation that benefited from both an epic housing price run up and same for stock market and observing that the old people seem to be very rich is A) stating the obvious and B) not a sign of the system being healthy and sustainable
25th percentile never goes above 125k at any age, and 50th percentile doesn't go much about 400k at any age.
Sounds like a lot compared to annual income, but that's trivial if you're trying to retire and live off these assets until you die. Especially since public support, pensions, etc have been eviscerated.
Assuming you can get income of 5%/year from your assets (obviously depends on interest rates, investment mix, etc), 50 percent of people would need to survive on 20k/year or less to retire.
That's not being wealthy. That's choosing between abject piece, and working until you die. Dystopian.
It annoys the heck out of much of the rest of the world but the truth is that Americans are staggeringly wealthy compared to nearly every other place on the planet. The US GDP per capita figures do translate into significant wealth for a large portion of the population.
Most don’t live like it and frankly the ones that show off typically are nowhere are wealthy as they’d like you to believe. Meanwhile the person driving an older model car and mowing their own grass has millions in the bank and doesn’t think twice about it.
Many are simply very wealthy but not materialistic.
There are so many deep flaws with this article that it is difficult to believe it was written by a seasoned economics professor. I can only conclude that he's pushing some sort of agenda or is otherwise politically motivated.
1. The complaints he is mocking ("can't afford a $1,000 repair", "can't afford eggs") are about liquidity and cash flow. He rebuts them with accumulated net worth. Home equity or 401k can't pay for groceries though. Someone can both have decent net worth and have trouble affording basic necessities or paying for emergencies.
2. Households aren't people. The SCF's unit is the family, and the age is set by the reference person. The author says stuff like "Americans at the 75th percentile are millionaires by their mid-50s" describes households that usually contain two adults. Per person, divide that number by two and it becomes a lot less impressive. It also mangles the young end, e.g. a 25-year-old living with their parents aren't their own household.
3. A cross-section isn't a life cycle. He reads a 2022 snapshot as a trajectory ("age a couple decades and you're rarely poor"). But today's 65-69s are special: they caught a four-decade bond bull market, an equity boom, and a housing boom on top of that. Add survivorship: poorer, sicker people die earlier and drop out of the older bins, which mechanically inflates old-age wealth.
4. He concedes half of median wealth is home equity, then waves it away. But if you strip primary residence, the overall SCF median falls from about $192,900 to roughly $57,900. Reverse mortgages ("negative mortgages") have steep fees, low loan-to-value in your 60s, and tiny take-up... and you still have to live somewhere.
Aside from all that, he is also using the data wrong. He had ChatGPT build the table from the raw SCF. I am actually quite familiar with that file. It requires survey weights and five imputation implicates handled correctly. Percentiles in five-year age groups from ~4,600 families carry error bars that are pretty wide! Not to mention 2022 was a peak: median net worth had jumped 37% from 2019, which was the largest on record, and it happened mostly due to house prices skyrocketing. That, in turn, skewed the numbers.
This whole article is giving off "PragerU"
Is this chart based off personal or household net worth?
Of course people in US are very wealthy if you are looking at dollar amounts. It would be impossible for cost of living to be this high, without a lot of people having decent amount of wealth.
But people's perception of their own wealth depends way more on relative value of their wealth compared to cost of living. If you live in a city where some shitty 2 bedroom apartments cost 1m$+, you aren't going to feel all that rich even if you have 10 million dollar net worth.
Seems fringe and out of touch with my reality and everyone I know. Does anyone have any info on who the author is and what sorta school of though he's involved with?
I was born and grew up in the states and am living outside the country (near Europe) and the smallest things made me realize how truly rich Americans are compared to the rest of the world, in real terms. Even things like fast food or Walmart are a testament to the abundance the US has (not saying it is right or wrong). And these systems are supported by the simple fact you just have a lot of rich people walking around relative to the global population.
To put it more succinctly, I know engineers/lawyers/doctors in this country I’ve been living in that make 2k a month and it’s good. They work hard, it’s stressful. A fast food worker in the US can make $15/hr and bring in 2.4k a month.
The chart there is deceptive—to be fair, we should be showing 1 and 5 percentile as well. Saying “walking around a mall you might encounter a few decamillionaires” is shifting focus from the fact that 1 in 10 people are experiencing near zero net worth and the bottom 1 percentile likely are suffering way more than the top 1 percent are enjoying their riches.
Wow, there's so much wrong with this "statistical analysis" to the point of absurdity. Goes to show that even a 30-year economics professor can be duped by AI.
The numbers are broken, a more accurate measure would have been median rather than average.
People work because they dont have or need more money to survive.
Reality will tell you if people need to work as many hours and as many jobs, they must be struggling. This is also true of many western and other so called rich countries.
Looking at a generation that benefited from both an epic housing price run up and same for stock market and observing that the old people seem to be very rich is A) stating the obvious and B) not a sign of the system being healthy and sustainable
25th percentile never goes above 125k at any age, and 50th percentile doesn't go much about 400k at any age.
Sounds like a lot compared to annual income, but that's trivial if you're trying to retire and live off these assets until you die. Especially since public support, pensions, etc have been eviscerated.
Assuming you can get income of 5%/year from your assets (obviously depends on interest rates, investment mix, etc), 50 percent of people would need to survive on 20k/year or less to retire.
That's not being wealthy. That's choosing between abject piece, and working until you die. Dystopian.
It annoys the heck out of much of the rest of the world but the truth is that Americans are staggeringly wealthy compared to nearly every other place on the planet. The US GDP per capita figures do translate into significant wealth for a large portion of the population.
Most don’t live like it and frankly the ones that show off typically are nowhere are wealthy as they’d like you to believe. Meanwhile the person driving an older model car and mowing their own grass has millions in the bank and doesn’t think twice about it.
Many are simply very wealthy but not materialistic.
There are so many deep flaws with this article that it is difficult to believe it was written by a seasoned economics professor. I can only conclude that he's pushing some sort of agenda or is otherwise politically motivated.
1. The complaints he is mocking ("can't afford a $1,000 repair", "can't afford eggs") are about liquidity and cash flow. He rebuts them with accumulated net worth. Home equity or 401k can't pay for groceries though. Someone can both have decent net worth and have trouble affording basic necessities or paying for emergencies.
2. Households aren't people. The SCF's unit is the family, and the age is set by the reference person. The author says stuff like "Americans at the 75th percentile are millionaires by their mid-50s" describes households that usually contain two adults. Per person, divide that number by two and it becomes a lot less impressive. It also mangles the young end, e.g. a 25-year-old living with their parents aren't their own household.
3. A cross-section isn't a life cycle. He reads a 2022 snapshot as a trajectory ("age a couple decades and you're rarely poor"). But today's 65-69s are special: they caught a four-decade bond bull market, an equity boom, and a housing boom on top of that. Add survivorship: poorer, sicker people die earlier and drop out of the older bins, which mechanically inflates old-age wealth.
4. He concedes half of median wealth is home equity, then waves it away. But if you strip primary residence, the overall SCF median falls from about $192,900 to roughly $57,900. Reverse mortgages ("negative mortgages") have steep fees, low loan-to-value in your 60s, and tiny take-up... and you still have to live somewhere.
Aside from all that, he is also using the data wrong. He had ChatGPT build the table from the raw SCF. I am actually quite familiar with that file. It requires survey weights and five imputation implicates handled correctly. Percentiles in five-year age groups from ~4,600 families carry error bars that are pretty wide! Not to mention 2022 was a peak: median net worth had jumped 37% from 2019, which was the largest on record, and it happened mostly due to house prices skyrocketing. That, in turn, skewed the numbers.
[flagged]