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New data show that joining the 1% remains unsettlingly hereditary
- kevinwuhoo 10y agoUpon reading the title I thought it would some kind of genetic study (maybe something like a genome-wide association study) on joining the 1%. Imagine 23andMe adding that to their panel.
- S_A_P 10y agoNot quite sure why this was down voted. This was my initial take as well. I was thinking, where did this widespread DNA test happen amongst the 1%? I guess maybe clarifying the thought would not have the downvotes?
- pitaj 10y agoI want to see this data over time.
- VeejayRampay 10y agoIn line with the core ideas Thomas Piketty lays out in Le Capital au 21ème Siècle. I like to think it's gotten better, but being born rich is still the easiest road to being wealthy later in time.
- comstock 10y agoDoes anyone have a list that reflects this? It doesn't seem to be the case in the Forbes 400: https://en.m.wikipedia.org/wiki/List_of_members_of_the_Forbes_400 https://en.m.wikipedia.org/wiki/List_of_members_of_the_Forbe... But perhaps that's biased?
- toyg 10y ago1% of 319m US population is 3.19m. 400 people are the 0.00000001%.
- comstock 10y agoRight, but is there any way to enumerate the top 1%? Or a proxy for it.
- toyg 10y agoCensus data, land ownership, shareholding, etc etc... It's a research field for a reason, figuring out this sort of data is not trivial. Edit: btw, this is why Piketty's work is so famous: he supposedly crunched more numbers than others, and produced extensive references. And still, there is/was a huge diatribe on how he crunched and what he crunched...
- arwhatever 10y agoIt makes me so angry that only 3.19m people are in the top 1%. We have got to do something about this.
- harryh 10y ago400 people are the 0.00000001%. I think you mean the 0.0001%
- hackuser 10y ago> It doesn't seem to be the case in the Forbes 400 Per the link, 7 of the 20 inherited their wealth. Of the others in the top 10, per Wikipedia: * Gates' wealthy family background is described in another post in this discussion. * Bezos' family (broadly defined) owned a 25,000 acre ranch in Texas and his father was an Exxon engineer * Buffet's father was a member of the US Congress * Zuckerburg is the child of a psychiatrist and dentist, and attended high school at Phillips Exeter academy (possibly the most elite high school in the U.S.). * Ellison grew up middle class * Bloomberg seems to have been working class Note also that in the land of opportunity, where ~33% of the population is white-skinned and male, 90% (18 of 20) of the 20 wealthiest people are white guys and the other 2 are white women who inherited their money from white guys.
- laughfactory 10y agoTakes money to make money. Plus, if you grow up in the top 1% the way you see the world, and the opportunities you're exposed to are dramatically different to those in the bottom half... Or, really, even in the 80th-90th percentile.
- rdlecler1 10y agoThis is very true. In my experience many people from money carry a certain confidence and expectation. They're higher on Maslows pyramid and they're not worrying about the wolf howling at their door. There's a certain ritual of knowledge that wealthy people have -- a kind of of dance signals if you're in or your out.
- Mikeb85 10y agoThe real advantage to being rich is that failure carries little to no consequence. You get many do-overs, and aren't stuck eating ramen in the bootstrap stage.
- peteretep 10y agoI was very expensively educated despite having lower-middle class parents (the government paid). I worked at Pizza Hut during the holidays while classmates went to private islands. Simply put, if I had told my teachers I wanted to be Prime Minister one day, they'd have told me I needed to enroll in debate club and study politics, rather than laughing or doubting my ability. As a child at school, nobody ever doubted or questioned that me and my classmates would run the world one day, and lo and behold, many of my classmates at 33 are in positions of considerable influence, power, and/or wealth. It is generally very very easy to spot other people who went to expensive private boarding schools in social and work situations.
- havetocharge 10y agoWas this expensive education as helpful for you and other folks from the relatively lower economic class as for private island hopping students (in terms of career opportunities)?
- marze 10y agoHearing the "the 1%" all the time gets annoying. The proper term is "the 0.01%".
- eli_gottlieb 10y agoThe really proper term is "the owning class": those for which money is invested, to produce goods, which are then sold for a profit to make money. This contrasts with everyone else, who uses labor to produce goods, which makes wages, which are then spent to consume goods.
- blisse 10y agoThat definition makes a lot more sense, bar someone like Gates? Do you have any links going in-depth more?
- joe_the_user 10y agoWell, if you mention Bill Gates, you aren't mentioning someone who worked their up from nothing. Rumor has it family connections helped Microsoft get their deal with IBM but in any case: "He is the son of William H. Gates Sr.[b] (born 1925) and Mary Maxwell Gates (1931–1994). His ancestry includes English, German, Irish, and Scots-Irish.[17][18] His father was a prominent lawyer, and his mother served on the board of directors for First Interstate BancSystem and the United Way." Which is simply to say the group of entrepreneurs who have worked their way up from nothing is smaller than many people imagine - since people do generally think of Gates as being in this group. And lots of Billionaires like to portray themselves as coming from nothing. https://en.wikipedia.org/wiki/Bill_Gates#Early_life https://en.wikipedia.org/wiki/Bill_Gates#Early_life
- psyc 10y agohttps://www.google.com/search?&q=das+kapital https://www.google.com/search?&q=das+kapital
- psyc 10y agoI see HN does not care for the classics.
- credit_guy 10y agoI can't really trust this analysis if they think less than one quarter of the Princeton graduates end up in the top 1%. All right, kidding aside (although the above observation is serious), statistics about the earnings of the graduates are very unreliable. I never disclosed to my Alma Mater how much I earn, and I guess most people don't disclose that either. How then do they figure out how many of the graduates are in the top 1%?
- harryh 10y agostatistical sampling
- credit_guy 10y agoStatistical sampling works if the sampled people answer your question. It also helps if you can find the contact of the samples to begin with. Now, here's some ways the statistical sampling can be substantially biased: people who are still repaying their student loans are in Princeton's database, and they can be contacted; those who didn't take loans (the rich kids) are not, so negative bias. Opposite: Princeton alumni with kids, who hope to get their kids into Princeton, donate. So they are in a database, and they end up in the statistical sampling. This is positive bias. Back to negative bias: some Princeton graduates end up unemployed (generally not because they are unqualified, but because of burnout/depression/family problems). Do you think they are in the mood to answer the phone and disclose their (non-existant) current income? In principle you can correct for a known bias. You can correct for several, but the more adjustments, the more noise in the estimation. Now back to my original remark: do you honestly believe only 23% of the Princeton graduates are in the top 1% of the earners?
- erubin 10y agodoes the survey check a few classes or a large sample? Between folks still in graduate school, in their early careers, people who have left the workforce to have kids or pursue lower paying jobs because they have financial security, you might end up with a smaller group than you expect putting in all the hours to make top 1% income.
- jwatte 10y agoAnd it's even worse in the 1% of the 1% circles, which are the real "aristocracy" that can tell politicians what to do. (Note: there are 30,000 people who are top 1% of top 1% in the US!)
- taneq 10y agoI don't see why it's surprising. Unless you're exceptionally lucky as well as exceptionally successful, it takes more than one working lifetime to amass enough wealth to be in the top 1%, and so you will only get there if you inherit some significant amount of wealth. What I find most interesting is the article's assumption that the biggest predictor should be which college you go to, a perception which the 'best' collages have spent millions of dollars to create.
- edblarney 10y ago"Unless you're exceptionally lucky as well as exceptionally successful, it takes more than one working lifetime to amass enough wealth to be in the top 1%, and so you will only get there if you inherit some significant amount of wealth." Not really. In terms of income, it's $500K/year. If you go into certain kinds of banking from a decent school, and do well, you can 'easily' earn that. Again, this is 1% income, not assets of which I'm speaking. But even then - if you spend 30 years in banking, and do well, you'll probably be in the 1%. If you were to say the top 0.05% - I think I might be more inclined to agree with you. Most of the 1% are not 'rich', they're really the upper bounds of 'upper middle class' - I'd say the 0.1% is where you can start calling yourself 'wealthy' in terms of economic class.
- tabeth 10y agoI'm sorry, but you must be out of touch with reality. Certain kinds of banking from a decent school? You mean an Ivy League or top school with acceptance rates lower than 20%? The reality is, you must be exceptionally lucky to have the circumstances that get you into your so-called "decent" school that gets you into "certain kids of banking" that allow you to "easily" earn 1% income.
- tcbawo 10y agoI have worked in the finance industry. The people making 500K all have a pedigree. Those who come from humble backgrounds are exceptionally rare.
- MarkMc 10y agoThis article seems to be missing an obvious point: The top 1% earn most of their money from investments rather than salary. And since rich parents will often give their assets to their children (in the form of trust funds or inheritance) it's natural that the children will also be rich. In fact, I'm surprised at how little advantage there is to having rich parents. Someone whose parents' income is in the top 1% and graduates from an elite university has less than a one-in-five chance of staying in the top 1%.
- Retric 10y agoTop 1% income includes a lot of people who are just barely in that 1% and get most of their money from income. Many people go in and out of that top 1% in good and bad years so it's not as fixed as your thinking. Wealthy people may even have a net negative income for multiple years while keeping a 7 figure lifestyle. Even wealth is tricky as someone's wealth at death is probably a better indicator. Though again complicated by trusts that are not in their name.
- taeric 10y agoCitations? I think the top 1% is a much more stable group than this indicates. Top 10%, I would completely agree with here. And I fully accept I could be wrong. I'm currently googling a few things, to see if I am off here. I'm asking not to be a jerk, but this is put forward as fact here. So I'm assuming you have actual numbers to back this up.
- yummyfajitas 10y agoOnly 1/3 of people in the top 1% in 2005 would remain in the top 5 by 2009. See table 3: https://www.aeaweb.org/conference/2013/retrieve.php?pdfid=462 https://www.aeaweb.org/conference/2013/retrieve.php?pdfid=46... Among people with income > $1M, 50% had this income for only 1 year. https://taxfoundation.org/millionaire-status-fleeting/ https://taxfoundation.org/millionaire-status-fleeting/ One great way to have a lot of income is to sell a house that appreciated in value over many years. But it's hard to do that repeatedly.
- shados 10y agoIf I buy a house, and give the house to my children when they retire (and they either use it or sell it to get one they want to use), they'll never have to pay rent, only taxes and maintenance. They can use that money to invest, to take longer to pick better job, to train and get better at what they do...and eventually they can take all of that, and give it to their children who'll be even richer, and so on. The only way to prevent this from happening is to ban inheritance, which would be all sorts of bullshit.
- peteretep 10y ago> ban inheritance, which > would be all sorts of > bullshit My only concern about a 100% inheritance tax is enforcement — what other bullshit is there? If there is one thing I can absolutely guarantee you, it's that once you're dead, you won't care what happens to your money. I fail to see any benefit to society of people receiving unearned money for having the right parents. Edit: as always, this is an unfailingly unpopular view. I'd encourage you to comment on what you don't like about it, though.
- dllthomas 10y agoPeople care before they are dead about what is going to happen after, and this changes their behavior. I'm not saying anything about your conclusion, but your reasoning is flawed.
- peteretep 10y agoSure, although I'd suggest that it's irrational to care about what happens once you're dead.
- conanbatt 10y agoIt is, but thats not a bad thing (in the board sense of irrational). A parent is willing to save a lot of money to give a bigger inheritance for his children, even knowing that his children will be much richer than he ever was at any point. That is irrational, but in the end is a huge part of the economic progess of society. Why would we want to deny some people the opportunity to do what they want AND benefit society as a whole at the same time?
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- randyrand 10y agoSo? Whats the issue? That's the point. I work hard to help my kids. They're supposed to be better off because of my work. That's the reason many of us get up in the morning. Dont take that away from me. If my hard work wasn't reflected in the data, why would I work hard? Why would I care about bettering my kids if it had absolutely no impact on how well they would do? Some people are acting like this is a problem. And to some small degree it is. But the opposite would be a much bigger problem. Of course, a good parent teaches their kids how to fish, not just gives them fish. If anything this study just shows that successful parents are good at teaching their kids to be successful.
- tabeth 10y agoWhy is the opposite a "much bigger problem", exactly? The title is that "new data shows that joining the 1% remains unsettlingly hereditary." The opposite of this would be that joining the 1% has nothing to do with heredity. How is this bad?
- paulddraper 10y agoIt's bad because it's random. Parenting makes no difference, it's just a lottery.
- tabeth 10y agoSomething having nothing to do with heredity does not mean it is random.
- paulddraper 10y agoTrue, it doesn't necessarily mean that. A lottery is one way to have zero heredity influence.
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- cookiecaper 10y ago
- Animats 10y agoTo make this even more effective, the current Congress wants to repeal the "death tax".
- niceperson 10y agoI don't think it is a problem, and I think that letting people keep what they've earned is only proper. The real reason this is happening now is that now the way to get rich is not to produce seomthing, but rather to bully people into making you rich. "riches" through pull, not work. That just shows the moral bankruptcy of our age.
- sporkenfang 10y agoIt's serfs and masters, and it always has been. Since a few hundred years ago, a creative/merchant/white collar class clawed their way a bit above the serfs, but the gap between all of us and the 1% is still enormous. Sure there are individual outliers between those two close lumps on the scale, and between the very distant lump and the rest of us, but lest we forget, those that have the gold make the rules.
- azm1 10y agoit has always been like that.Few powerful people only.Unfortunatelly socialism emerged like a fake and dangerous pseudosaviour and from then on many people think we are supposed to be 'equal'.
- gajjanag 10y ago> It's serfs and masters, and it always has been. This is an excellent point, whose magnitude I have come to appreciate more recently. One of my favorite ruminations on the fundamental role that inequality plays in civilized society comes from "Midnight Tides" by Steven Erikson: "As they walked, Tehol spoke '... the assumption is the foundation stone of Letherii society, perhaps all societies the world over. The notion of inequity, my friends. For from inequity derives the concept of value, whether measured by money or the countless other means of gauging human worth. Simply put, there resides in all of us the un-challenged belief that the poor and the starving are in some way deserving of their fate. In other words, there will always be poor people. A truism to grant structure to the continual task of comparison, the establishment through observation of not our mutual similarities, but our essential differences. 'I know what you're thinking, to which I have no choice but to challenge you both. Like this. Imagine walking down this street, doling out coins by the thousands. Until everyone here is in possession of vast wealth. A solution? No, you say, because among these suddenly rich folk there will be perhaps a majority who will prove wasteful, profligate, and foolish, and before long they will be poor once again. Besides, if wealth were distributed in such a fashion, the coins themselves would lose all value - they would cease being useful. And without such utility, the entire social structure we love so dearly would collapse. 'Ah, but to that I say, so what? There are other ways of measuring self-worth. To which you both heatedly reply: with no value applicable to labour, all sense of worth vanishes! And in answer to that I simply smile and shake my head. Labour and its product become the negotiable commodities. But wait, you object, then value sneaks in after all! Because a man who makes bricks cannot be equated with, say, a man who paints portraits. Material is inherently value-laden, on the basis of our need to assert comparison - but ah, was I not challenging the very assumption that one must proceed with such intricate structures of value? 'And so you ask, what's your point, Tehol? To which I reply with a shrug. Did I say my discourse was a valuable means of using this time? I did not. No, you assumed it was. Thus proving my point!'"
- KboPAacDA3 10y agoWhat shall we do about it, comrades?
- programmarchy 10y agoBurn trash cans, smash windows, and punch some Nazis of course.
- eli_gottlieb 10y agoSeize the means of production.
- ameister14 10y agoThis is why we should have a 95% inheritance tax on assets over $1 million dollars outside special case like family owned businesses and a family home.
- chopin 10y agoNo special cases. Why should there be? $1 million should be enough to cover most family homes. For businesses alike. Why should the next generation be a better business owner than anybody else?
- ameister14 10y agoIf you own a shop or restaurant, you should be able to pass it on to your children.
- psychometry 10y agoI don't know how estate tax brackets work, but above a certain amount the rate should really be 100%.
- douche 10y agoI cannot disagree more heartily. $1 million is really not that much money. I would immediately start squirreling hard currency away in the walls or burying mason jars of it in the back yard if idiocy like that were made law.
- ameister14 10y ago$1 million dollars is what many people earn in a lifetime of work. I wouldn't describe it as 'not really that much money.' It's the same size as the loan Trump got from his father. It's certainly more than most people can save. If you earn a huge fortune, I would prefer that it be gone from your family in a maximum two generations of mediocre management. Otherwise we risk hereditary fortune and power.
- whenwillitstop 10y agoWhy would anyone work hard if the government will strip it from their family.
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- jondubois 10y agoI think it's terrible how universities reduce a student's achievements down to a single number (GPA) when there are so many factors involved. When I was at university, some students didn't have to work to earn money and they could focus on their studies 100% - That gave them an unfair advantage. I worked for the second half of my studies and there was an obvious, sudden decline in my grades.
- cylinder 10y agoWho cares who is in the top 1%? You're all missing the point. We should strive to provide decency to all people, and decency doesn't require being rich. The best societies can be monarchies or even oligarchies. Stop obsessing over the super rich!
- 234dd57d2c8dba 10y agoSshhh dude you're going to ruin the facade. People need to keep believing money will make them happy so they will endlessly consume cheap junk. What if they start doing things like living with less and making their own stuff???