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70% of rich families lose their wealth by the second generation. http://money.com/money/3925308/rich-families-lose-wealth/ http://money.com/money/3925308/rich-f

70% of rich families lose their wealth by the second generation. http://money.com/money/3925308/rich-families-lose-wealth/ http://money.com/money/3925308/rich-families-lose-wealth/ 90% is lost after that. https://medium.com/datadriveninvestor/why-wealth-barely-lasts-for-3-generations-d409e5f28106 https://medium.com/datadriveninvestor/why-wealth-barely-last...

VectorLock 7y ago
Maybe if they were able to put superior genes in their offspring they'd be able to move that metric.
- gingabriska 7y ago
  How much is higher intelligence corelated to being able to manage wealth well?
- defertoreptar 7y ago
  That implies that it has to do with genes in the first place. Perhaps there's an argument there. However, I would also consider that the size of an estate may grow, but not exponentially (at least not indefinitely). Yet, the size of a family tree does grow exponentially.
  - codeisawesome 7y ago
    Genghis Khan would like a word with you.
- 2_listerine_pls 7y ago
  You are assuming all is in the genes.
  - VectorLock 7y ago
    I assume that at least part of it is in the genes.
foolrush 7y ago
As a counterpoint: “The richest families in Florence in 1427 are still the richest families in Florence” https://qz.com/694340/the-richest-families-in-florence-in-1427-are-still-the-richest-families-in-florence/ https://qz.com/694340/the-richest-families-in-florence-in-14...
- xenospn 7y ago
  I think that's an anecdote for someone coming up with a system that works and not deviating. Obviously most people are very bad at that.
- gingabriska 7y ago
  And the catch was it's not the same family. People sharing a last name today can't be traced back to specific family which existed in past.
consciouskernel 7y ago
That article cites the Williams Group, which appears to be some sort of consultancy with the tagline "we prepare heirs." This isn't the first time I've heard the 70% number, and I've never been able to find a single scientific study supporting it. There's also never any clarification on what "rich" means, or what qualifies as "lose their wealth."
- vixen99 7y ago
  How about this by Gary Becker https://en.wikipedia.org/wiki/Gary_Becker https://en.wikipedia.org/wiki/Gary_Becker Becker, Gary S & Tomes, Nigel, 1986. "Human Capital and the Rise and Fall of Families," Journal of Labor Economics, University of Chicago Press, vol. 4(3), pages 1-39, July. "The authors examine a number of empirical studies for different countries. Regression to the mean in earnings in rich countries appears to be rapid. Almost all the earnings advantages or disadvantages of ancestors are wiped out in three generations."
  - DuskStar 7y ago
    There is a massive difference between earnings and wealth.
  - MiroF 7y ago
    you see how that's completely different though right?
  - soVeryTired 7y ago
    > The authors examine a number of empirical studies for different countries. Regression to the mean in earnings in rich countries appears to be rapid. Almost all the earnings advantages or disadvantages of ancestors are wiped out in three generations. That's deeply at odds with what I know about the world (think about the existence of the "middle class", and how middle class parents tend to have middle class children). That, and the fact that the article was written by Gary Becker (he of "all crime is a rational cost / benefit tradeoff" fame), and published at a time when economists did very little emperical work, make me more or less immediately dismiss the claim. But if anyone could give me the gist of the argument they make, I'd love to be proven wrong.

VectorLock 7y ago

Maybe if they were able to put superior genes in their offspring they'd be able to move that metric.

gingabriska 7y ago
How much is higher intelligence corelated to being able to manage wealth well?
defertoreptar 7y ago
That implies that it has to do with genes in the first place. Perhaps there's an argument there. However, I would also consider that the size of an estate may grow, but not exponentially (at least not indefinitely). Yet, the size of a family tree does grow exponentially.
- codeisawesome 7y ago
  Genghis Khan would like a word with you.
2_listerine_pls 7y ago
You are assuming all is in the genes.
- VectorLock 7y ago
  I assume that at least part of it is in the genes.

foolrush 7y ago

As a counterpoint: “The richest families in Florence in 1427 are still the richest families in Florence” https://qz.com/694340/the-richest-families-in-florence-in-1427-are-still-the-richest-families-in-florence/ https://qz.com/694340/the-richest-families-in-florence-in-14...

xenospn 7y ago
I think that's an anecdote for someone coming up with a system that works and not deviating. Obviously most people are very bad at that.
gingabriska 7y ago
And the catch was it's not the same family. People sharing a last name today can't be traced back to specific family which existed in past.

consciouskernel 7y ago

That article cites the Williams Group, which appears to be some sort of consultancy with the tagline "we prepare heirs." This isn't the first time I've heard the 70% number, and I've never been able to find a single scientific study supporting it. There's also never any clarification on what "rich" means, or what qualifies as "lose their wealth."

vixen99 7y ago
How about this by Gary Becker https://en.wikipedia.org/wiki/Gary_Becker https://en.wikipedia.org/wiki/Gary_Becker Becker, Gary S & Tomes, Nigel, 1986. "Human Capital and the Rise and Fall of Families," Journal of Labor Economics, University of Chicago Press, vol. 4(3), pages 1-39, July. "The authors examine a number of empirical studies for different countries. Regression to the mean in earnings in rich countries appears to be rapid. Almost all the earnings advantages or disadvantages of ancestors are wiped out in three generations."
- DuskStar 7y ago
  There is a massive difference between earnings and wealth.
- MiroF 7y ago
  you see how that's completely different though right?
- soVeryTired 7y ago
  > The authors examine a number of empirical studies for different countries. Regression to the mean in earnings in rich countries appears to be rapid. Almost all the earnings advantages or disadvantages of ancestors are wiped out in three generations. That's deeply at odds with what I know about the world (think about the existence of the "middle class", and how middle class parents tend to have middle class children). That, and the fact that the article was written by Gary Becker (he of "all crime is a rational cost / benefit tradeoff" fame), and published at a time when economists did very little emperical work, make me more or less immediately dismiss the claim. But if anyone could give me the gist of the argument they make, I'd love to be proven wrong.