4 ms·

Not accounting for people's home equity when determining their wealth is one of the most bonkers bougie things I've ever heard. Should we not count their 401k s

by CamTin 8y ago

Not accounting for people's home equity when determining their wealth is one of the most bonkers bougie things I've ever heard. Should we not count their 401k savings either, because "if X took the early withdrawal penalty" isn't fair either? If you're rich, you're rich. It makes no difference if that wealth is tied up in illiquid assets. If the precarity if your financial situation is based on the fact that you're worth millions but have decided for some reason to leave it invested in one large, volatile asset, then you don't get to claim you're in the same boat as someone who is pawning their wedding ring until payday to make rent. Being rich but poorly invested (90% of your net worth is in your home equity) is a decision you made, not a situation you found yourself born into.

matthewdgreen 8y ago
If every single person in the country made exactly the same salary, and saved the same percentage of their income to cover the exact same modest retirement lifestyle, you'd still have people (close to retirement) who appeared "rich" and people early in their career who appeared relatively "poor". Using wealth data without normalizing for age you could also make it look like there was a vastly unequal society, and of course there would no policy you could adopt to "fix" the problem that wasn't there. What the author is doing here is literally the definition of bad data science.
FrozenVoid 8y ago
>If you're rich, you're rich. I'm not even middle class, i don't own a house or a car. I just see that people easily overgeneralize the well-off 30 million upper-middle class with truly rich people who have entirely different lifestyle. Believing the there is 32million strong aristocracy is delusional, all these SJW privilege Olympics make your kind seem insane and full of envy. You want to lump middle-class people with multi-millionaires with financial security and proclaim them the unified burgeios enemy that must be dealt with. "If they have some money, They're rich capitalist pigs" Its like some soviet union guilt trip: If you own jeans your dangerous bourgie class traitor! If you listen to foreign radio = capitalist lapdog. If you own foreign currency = speculator and capitalist. Soviet Union glamorized poverty and struggle, everyone was LARPing as some poor, honest worker despite a black market,blat and bribery being commonplace. If you dislike Bourgeois(aka Middle class) so much, why don't take one-way ticket flight to socialist paradise of Venezuela? They're getting rid of their toxic privileged Bourgeois class. Just for the record i'm NOT some "free-market will fix it" capitalist: I'm in favor of sane, Scandinavian-like system of democracy(also promoted by Bernie Sanders as democratic socialism) which exist with support of high taxes. I'm against gulags, wealth redistribution and marking people as class traitors/privileged/"eat the Rich", to which any communist country eventually devolves.
- CamTin 8y ago
  Well that escalated quickly. I'm not saying "people with adequate, diversified retirement savings are evil capitalists." I'm just saying that "We shouldn't count the value of people's houses when determining how wealthy they are." is absurd. Clearly it should count. They own it. It's not a political stance, just a pro-accuracy one.
  - FrozenVoid 8y ago
    The problem with it these people will not sell their houses. Its not a liquid capital. Selling their only house would be something like once-in-lifetime decision. What i'm saying, and you're failing to understand is that a if citizen A has a million dollar house and 10K in savings but his income is very low, he is actually much much poorer than citizen B who has 1.01million in cash, 80K salary and rents an apartment. >"Pro-accuracy" Its clearly obvious B has more economic impact, but with networth they seem as identical.
    - leetcrew 8y ago
      your argument essentially reduces to "$1.01mm net + $80k salary is much more well off than $1.01mm net + low salary". unless A happens to be a financial wizard, this is always going to be true no matter how A's assets are allocated. i'm not sure what your point is with respect to counting primary residences in net worth. if A were truly worse off for having the house (and they very well may be with that lopsided allocation), they could just sell it. a typical yearly return on $1.01mm is very close to the median household income in the US.
    - CamTin 8y ago
      Yeah, they have the same wealth right now. I'm not sure what "economic impact" means here, but Citizen B will likely be much much richer in the future, seeing has how his 1million in cash can basically instantly be converted to securities that allow him to live without working at all, and he can either quit his $80k/year job or save all o it. Citizen A can likewise sell his house, buy those same securities, and also live without working, but evidently doesn't have the same option to work for $80k/year and save even more, which is all the more reason he should diversify his portfolio. Forgetting the potential salary (assume both lose their jobs and can't work ever again), they are exactly as rich as one another, but A has foolishly constructed his portfolio such that his house is 90%+ of his wealth. Yes, he is in a financially precarious situation due to his reliance on strong housing prices, but it's totally of his own design. He can sell at any time and cash out. If he can't actually sell (no one will buy the house for what it's "worth") then his house isn't really worth a million dollars.

by CamTin 8y ago

matthewdgreen 8y ago

If every single person in the country made exactly the same salary, and saved the same percentage of their income to cover the exact same modest retirement lifestyle, you'd still have people (close to retirement) who appeared "rich" and people early in their career who appeared relatively "poor". Using wealth data without normalizing for age you could also make it look like there was a vastly unequal society, and of course there would no policy you could adopt to "fix" the problem that wasn't there. What the author is doing here is literally the definition of bad data science.

FrozenVoid 8y ago

>If you're rich, you're rich. I'm not even middle class, i don't own a house or a car. I just see that people easily overgeneralize the well-off 30 million upper-middle class with truly rich people who have entirely different lifestyle. Believing the there is 32million strong aristocracy is delusional, all these SJW privilege Olympics make your kind seem insane and full of envy. You want to lump middle-class people with multi-millionaires with financial security and proclaim them the unified burgeios enemy that must be dealt with. "If they have some money, They're rich capitalist pigs" Its like some soviet union guilt trip: If you own jeans your dangerous bourgie class traitor! If you listen to foreign radio = capitalist lapdog. If you own foreign currency = speculator and capitalist. Soviet Union glamorized poverty and struggle, everyone was LARPing as some poor, honest worker despite a black market,blat and bribery being commonplace. If you dislike Bourgeois(aka Middle class) so much, why don't take one-way ticket flight to socialist paradise of Venezuela? They're getting rid of their toxic privileged Bourgeois class. Just for the record i'm NOT some "free-market will fix it" capitalist: I'm in favor of sane, Scandinavian-like system of democracy(also promoted by Bernie Sanders as democratic socialism) which exist with support of high taxes. I'm against gulags, wealth redistribution and marking people as class traitors/privileged/"eat the Rich", to which any communist country eventually devolves.

CamTin 8y ago
Well that escalated quickly. I'm not saying "people with adequate, diversified retirement savings are evil capitalists." I'm just saying that "We shouldn't count the value of people's houses when determining how wealthy they are." is absurd. Clearly it should count. They own it. It's not a political stance, just a pro-accuracy one.
- FrozenVoid 8y ago
  The problem with it these people will not sell their houses. Its not a liquid capital. Selling their only house would be something like once-in-lifetime decision. What i'm saying, and you're failing to understand is that a if citizen A has a million dollar house and 10K in savings but his income is very low, he is actually much much poorer than citizen B who has 1.01million in cash, 80K salary and rents an apartment. >"Pro-accuracy" Its clearly obvious B has more economic impact, but with networth they seem as identical.
  - leetcrew 8y ago
    your argument essentially reduces to "$1.01mm net + $80k salary is much more well off than $1.01mm net + low salary". unless A happens to be a financial wizard, this is always going to be true no matter how A's assets are allocated. i'm not sure what your point is with respect to counting primary residences in net worth. if A were truly worse off for having the house (and they very well may be with that lopsided allocation), they could just sell it. a typical yearly return on $1.01mm is very close to the median household income in the US.
  - CamTin 8y ago
    Yeah, they have the same wealth right now. I'm not sure what "economic impact" means here, but Citizen B will likely be much much richer in the future, seeing has how his 1million in cash can basically instantly be converted to securities that allow him to live without working at all, and he can either quit his $80k/year job or save all o it. Citizen A can likewise sell his house, buy those same securities, and also live without working, but evidently doesn't have the same option to work for $80k/year and save even more, which is all the more reason he should diversify his portfolio. Forgetting the potential salary (assume both lose their jobs and can't work ever again), they are exactly as rich as one another, but A has foolishly constructed his portfolio such that his house is 90%+ of his wealth. Yes, he is in a financially precarious situation due to his reliance on strong housing prices, but it's totally of his own design. He can sell at any time and cash out. If he can't actually sell (no one will buy the house for what it's "worth") then his house isn't really worth a million dollars.