4 ms·
Is there a measure of affluence that captures lifestyle, income, and assets? Something like: Change in overall net worth - consumption It seems there are so
by dkokelley 5y ago
Is there a measure of affluence that captures lifestyle, income, and assets? Something like:
Change in overall net worth - consumption
It seems there are so many ways to capture what "wealthy" really means. Some edge cases that challenge my understanding of wealthy:
1. I could make and spend $1m/year and have a net worth of $0.
2. I could earn $1m/year and consume $20k
2.1 I could donate the difference and have a net worth change of $0
2.2 I could save/invest the difference and grow my wealth
3. I could make $1m and have my $1m investments go to $0, leaving no change in my net worth (aside from that year's consumption)
4. I could make $0 and have my investments grow by $1m
5. I could have a net worth of $0 but earn $1m/year
6. I could make $10m/year but have my $100m investments go down to $50m, leaving me $40m poorer, but still be both a high earner and high net worth individual.
Also, debt factors in to these.
All of these variables move, and the definition of "rich" seems to be an ill-defined function of:
- Income (from all sources)
- Net worth
- net worth change
- Consumption/lifestyle
- Debt
- Other (connections, access to capital, creditworthiness)
- rkk3 5y agoYes it really depends on what you are trying to explore. In this article they even excluded realized capital-gains from their income calculations which is going to change the profile considerably of who is included (wage earners I guess?). I wonder how much overlap there even is between the top .01% Wealth households and .01% income without capital gains.
- alasdair_ 5y agoI completely agree here. People claiming tens of millions in regular non-capital gains income are a completely different group from the “real” 0.01% who most likely use capital gains for almost all of it. The “income” 0.01% are going to be people like lottery winners and are wholely unrepresentative.
- rkk3 5y agoYeah the cutoffs were 31M in non capital gains income (2015) vs 371M assets (2012). After income taxes they'd only get around half, ~16M, which is about 4.3% of 371M. So .01% non-cap gains income is maybe keeping pace on average with the .01% wealth's passive gains.