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In a 2014 study, he found that 58 percent of affluent people are first-generation wealth, not trust-fund babies. I've heard that idea before, that the notion o

In a 2014 study, he found that 58 percent of affluent people are first-generation wealth, not trust-fund babies. I've heard that idea before, that the notion of inherited unearned wealth as explaining the bulk of the wealthy population is actually misleading. Same thing was said in that old book The Millionaire Mind I think.

munificent 5y ago
I think people is the wrong metric for this statistic. A large number of just-barely-affluent nouveau riche could drown out a handful of old money robber barons that own the world. The much more interesting statistic would slice it by dollar: What percentage of dollars are owned by first-generation wealthy versus old money?
- fshbbdssbbgdd 5y ago
  Really depends on what you’re trying to use the number for. If you’re trying to study wealthy people, it makes sense to use stats that are counting people filtered by wealth. If you are trying to study wealth itself, it makes sense to use stats that are weighted by dollar.
  - jxramos 5y ago
    that's what I figured, the people metric seems more pertinent to ideas of economic mobility across the population as a whole, we could think of a population percentile, like say jumping into the notorious 1%. But the other metric is interesting too, something like an age x wealth product, the longer the wealth was held the higher the score, and the more wealth held the higher the score too. One could imagine like an area under net worth curve and create a histogram with decades of time as buckets, say across a 300 year span maybe?
- wcarss 5y ago
  I spent the last 25 minutes trying to find out exactly that, and have so far come up nearly blank, but I agree that dollars inherited is a way more useful question. The meme of "a high percent of people who are millionaires are first-generation millionaires" is pervasive. Googling this returns mostly investment scheme websites and CNBC/USA Today/etc clickbait quoting "The Millionaire Next Door", and talking about how "If They Did It, You Can Do It Too!" -- it's like something straight out of lies, damned lies, and statistics.
- skybrian 5y ago
  It's more interesting for some purposes, but if you're looking for achievable goals and who you should emulate, the old money types are outliers.
Retric 5y ago
It really depends on where you’re drawing the line for wealth. The Millionaire next door set it at what most would consider a healthy retirement. Looking at the 100M level and things are different because unlike say 3M people can’t really just save up that kind of money, it takes leverage not just time and budgeting. Further, it’s questionable what counts as inheritance vs hard work. If you turned the family business from a 5M dollar company to a 500M dollar company that’s difficult, but easier than starting from scratch.
- jxramos 5y ago
  that's a fascinating point, what figures can be attained by what means, very good distinction. I remember looking at lifetime earnings of software engineers and tabulating a bunch of generic lifetime gross salaries in general. It's in the millions range for sure but it's not near anywhere in the $100M level. A career lasting 50yr at $50k/yr --> $2.5M gross; $500k/yr --> $25M gross.
InitialLastName 5y ago
Note that (and I don't have a proper comp for this, but would be interested in one) 58% of wealthy people being first-generation wealth does not mean (or, with the way wealth tends to follow a power-law distribution, even necessarily imply) that 58% of the wealth held by affluent people is held by first-generation wealthy.

munificent 5y ago

I think people is the wrong metric for this statistic. A large number of just-barely-affluent nouveau riche could drown out a handful of old money robber barons that own the world. The much more interesting statistic would slice it by dollar: What percentage of dollars are owned by first-generation wealthy versus old money?

fshbbdssbbgdd 5y ago
Really depends on what you’re trying to use the number for. If you’re trying to study wealthy people, it makes sense to use stats that are counting people filtered by wealth. If you are trying to study wealth itself, it makes sense to use stats that are weighted by dollar.
- jxramos 5y ago
  that's what I figured, the people metric seems more pertinent to ideas of economic mobility across the population as a whole, we could think of a population percentile, like say jumping into the notorious 1%. But the other metric is interesting too, something like an age x wealth product, the longer the wealth was held the higher the score, and the more wealth held the higher the score too. One could imagine like an area under net worth curve and create a histogram with decades of time as buckets, say across a 300 year span maybe?
wcarss 5y ago
I spent the last 25 minutes trying to find out exactly that, and have so far come up nearly blank, but I agree that dollars inherited is a way more useful question. The meme of "a high percent of people who are millionaires are first-generation millionaires" is pervasive. Googling this returns mostly investment scheme websites and CNBC/USA Today/etc clickbait quoting "The Millionaire Next Door", and talking about how "If They Did It, You Can Do It Too!" -- it's like something straight out of lies, damned lies, and statistics.
skybrian 5y ago
It's more interesting for some purposes, but if you're looking for achievable goals and who you should emulate, the old money types are outliers.

Retric 5y ago

It really depends on where you’re drawing the line for wealth. The Millionaire next door set it at what most would consider a healthy retirement. Looking at the 100M level and things are different because unlike say 3M people can’t really just save up that kind of money, it takes leverage not just time and budgeting. Further, it’s questionable what counts as inheritance vs hard work. If you turned the family business from a 5M dollar company to a 500M dollar company that’s difficult, but easier than starting from scratch.

jxramos 5y ago
that's a fascinating point, what figures can be attained by what means, very good distinction. I remember looking at lifetime earnings of software engineers and tabulating a bunch of generic lifetime gross salaries in general. It's in the millions range for sure but it's not near anywhere in the $100M level. A career lasting 50yr at $50k/yr --> $2.5M gross; $500k/yr --> $25M gross.

InitialLastName 5y ago

Note that (and I don't have a proper comp for this, but would be interested in one) 58% of wealthy people being first-generation wealth does not mean (or, with the way wealth tends to follow a power-law distribution, even necessarily imply) that 58% of the wealth held by affluent people is held by first-generation wealthy.