4 ms·

I very strongly suspect that the overlap between people in the 1% income level and people in the 1% wealth level is extremely high.

by harryh 7y ago

rootusrootus 7y ago
That may very well be true, but I don't have any good data. To hit 1% in income, you need to make about 750K a year. To hit 1% in net worth, you have to clear a bit more than 10M. So the question would be how many people hit 750K for a year, or a few years of their life, without accumulating 10M in net worth? Depending on lifestyle and location, I bet there are plenty of people who make a load of money but also spend a load of money.
- harryh 7y ago
  Look at it from the other direction: How many people are in the top 1% of NW but fail to be in the top 1% of income? Surely some but I bet not a ton. EDIT: I found this - https://economix.blogs.nytimes.com/2012/01/17/measuring-the-top-1-by-wealth-not-income/ https://economix.blogs.nytimes.com/2012/01/17/measuring-the-... "Some readers wondered if the 1 percent by wealth weren’t an entirely different group of people from the 1 percent by income. But there is substantial overlap: the Fed data suggests that about half of the top 1 percent of earners are also among the top 1 percent in the net worth category. Almost all the rest of the top earners are still in the top 5 percent when it comes to net worth."
  - saltcured 7y ago
    Going by the thresholds above (I don't know that they are correct), sitting on $10M in assets would require a 7.5% annual income return to reach the $750k threshold. That sounds very unlikely, if the person is living on passive investment income. Even with a well-performing stock or real estate portfolio, to have that level of returns you are mostly talking about unrealized gains. Those would not count as income if someone is living in equilibrium, growing their assets over time. You would only realize those investment gains as income if you were liquidating your assets to fund a lavish but limited duration lifestyle. Edit: noting your addendum, I guess we're looking at the difference between a technical implication (you must have this income if you have these assets) versus a behavioral trait (most people don't live frugally or complacently with big piles of assets)...?
- username90 7y ago
  > To hit 1% in income, you need to make about 750K a year. Source? Looks like the cutoff is just 300k a year. A pretty large fraction of developers at big companies like Google and Facebook should get above that in their lifetime. https://dqydj.com/top-one-percent-united-states/ https://dqydj.com/top-one-percent-united-states/
  - rootusrootus 7y ago
    I skipped past the dqydj.com hits on Google beacuse I don't recognize the name. Which isn't to say that it isn't valid data, just that I was looking for something that I felt was plausibly accurate. For example, this Investopedia article puts it at $718K when written [1]. CBS News puts it at 421K. CNN Money put it at $388K ... in 2014. In 2018 Forbes put it at $488K. So it depends on who you think ran the numbers right. Or what they mean by 1% (some sources try to combine income and net worth to make a hybrid definition of 1%, which just muddies the water even more). 1. https://www.investopedia.com/personal-finance/how-much-income-puts-you-top-1-5-10/ https://www.investopedia.com/personal-finance/how-much-incom...

I very strongly suspect that the overlap between people in the 1% income level and people in the 1% wealth level is extremely high.

by harryh 7y ago

I very strongly suspect that the overlap between people in the 1% income level and people in the 1% wealth level is extremely high.

rootusrootus 7y ago

That may very well be true, but I don't have any good data. To hit 1% in income, you need to make about 750K a year. To hit 1% in net worth, you have to clear a bit more than 10M. So the question would be how many people hit 750K for a year, or a few years of their life, without accumulating 10M in net worth? Depending on lifestyle and location, I bet there are plenty of people who make a load of money but also spend a load of money.

harryh 7y ago
Look at it from the other direction: How many people are in the top 1% of NW but fail to be in the top 1% of income? Surely some but I bet not a ton. EDIT: I found this - https://economix.blogs.nytimes.com/2012/01/17/measuring-the-top-1-by-wealth-not-income/ https://economix.blogs.nytimes.com/2012/01/17/measuring-the-... "Some readers wondered if the 1 percent by wealth weren’t an entirely different group of people from the 1 percent by income. But there is substantial overlap: the Fed data suggests that about half of the top 1 percent of earners are also among the top 1 percent in the net worth category. Almost all the rest of the top earners are still in the top 5 percent when it comes to net worth."
- saltcured 7y ago
  Going by the thresholds above (I don't know that they are correct), sitting on $10M in assets would require a 7.5% annual income return to reach the $750k threshold. That sounds very unlikely, if the person is living on passive investment income. Even with a well-performing stock or real estate portfolio, to have that level of returns you are mostly talking about unrealized gains. Those would not count as income if someone is living in equilibrium, growing their assets over time. You would only realize those investment gains as income if you were liquidating your assets to fund a lavish but limited duration lifestyle. Edit: noting your addendum, I guess we're looking at the difference between a technical implication (you must have this income if you have these assets) versus a behavioral trait (most people don't live frugally or complacently with big piles of assets)...?
username90 7y ago
> To hit 1% in income, you need to make about 750K a year. Source? Looks like the cutoff is just 300k a year. A pretty large fraction of developers at big companies like Google and Facebook should get above that in their lifetime. https://dqydj.com/top-one-percent-united-states/ https://dqydj.com/top-one-percent-united-states/
- rootusrootus 7y ago
  I skipped past the dqydj.com hits on Google beacuse I don't recognize the name. Which isn't to say that it isn't valid data, just that I was looking for something that I felt was plausibly accurate. For example, this Investopedia article puts it at $718K when written [1]. CBS News puts it at 421K. CNN Money put it at $388K ... in 2014. In 2018 Forbes put it at $488K. So it depends on who you think ran the numbers right. Or what they mean by 1% (some sources try to combine income and net worth to make a hybrid definition of 1%, which just muddies the water even more). 1. https://www.investopedia.com/personal-finance/how-much-income-puts-you-top-1-5-10/ https://www.investopedia.com/personal-finance/how-much-incom...