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This is daft. Treating wealth as a measure of poverty wouldn’t work. Think about why. It pretends families don’t exist. Total non-starter.

kenjackson 3y ago
Doesn’t income have the same issue?
- 2devnull 3y ago
  Income isn’t perfect but it’s used for a reason. Think about the problems inherent in defining “wealth”. It’s too squishy a concept to use for policy reasons, or else they would. Is somebody who makes seven figures but spends it all on food, entertainment and travel really poor? No.
  - kenjackson 3y ago
    Except wealth is used for lots of policy. For example, financial aid at schools attempts to use wealth. Which is why they take into account equity in your home. And if you have ten million in a trust and no income — are you poor?
    - teddyh 3y ago
      Not if payments from that trust is classified as “income”.
      - giaour 3y ago
        Let's say that the terms of a trust dictate that interest revenue be immediately paid out to a specific charity, but you are allowed to spend the principal. Are you poor?
    - 2devnull 3y ago
      I’m saying it’s not useful in policy as measurement of poverty. Poverty is and forever will be defined by income. Wealth is used in policy like everything else, yes of course. Tax policy is a great example. Is there anything that tax policy doesn’t have loopholes and special provisions for? I’d argue that wealthy people benefit from all that. Poor people benefit from clear and effective policies that use simpler, less game-able constructs. Getting into the business of trying to define nebulous hard to define constructs like wealth will benefit those with greater resources, always.
giaour 3y ago
So, if someone has a low or nonexistent income and vast inherited wealth, you would consider them to be poor?
- gambiting 3y ago
  Not unheard of - people inherit great houses in fantastic locations that they have no money to keep and which they can't sell otherwise for various legal reasons. You're poor despite living in prime estate and despite theoretically having a net worth into 6 digits.
  - eru 3y ago
    What kinds of legal reasons?
    - giaour 3y ago
      The property's transfer or sale may be prohibited by the terms of inheritance. IANAL and am mostly familiar with this type of situation from rom-coms about down-on-their-luck dukes who live in crumbling, unsellable castles, so I'm not sure if that scenario truly exists in law or if it's just a handy conceit.
      - kenjackson 3y ago
        I prefer the rule where you must spend $30 million dollars in 30 days, but have no trace of the money left — yet still have received fair value for your spending — in order to get the inheritance.
        eru 3y ago
        That's pretty easy: You go to a bank to manufacture you a derivative on eg the stock market. The deal is that you pay them 30 million dollars now, and in 30 days they either pay you x dollars with probability p or you lose everything. Eg they pay you 100 million dollars, if the S&P 500 index goes above, say, 5000 which they think will happen with probability of just under 30%. If you do the math: the deal is fair. If you lose the bet, you get your inheritance. If you win the bet, you get your 100 million dollars from the bank, and presumably pay the 30 million dollars back (if that's a stipulation in the will).

kenjackson 3y ago

Doesn’t income have the same issue?

2devnull 3y ago
Income isn’t perfect but it’s used for a reason. Think about the problems inherent in defining “wealth”. It’s too squishy a concept to use for policy reasons, or else they would. Is somebody who makes seven figures but spends it all on food, entertainment and travel really poor? No.
- kenjackson 3y ago
  Except wealth is used for lots of policy. For example, financial aid at schools attempts to use wealth. Which is why they take into account equity in your home. And if you have ten million in a trust and no income — are you poor?
  - teddyh 3y ago
    Not if payments from that trust is classified as “income”.
    - giaour 3y ago
      Let's say that the terms of a trust dictate that interest revenue be immediately paid out to a specific charity, but you are allowed to spend the principal. Are you poor?
  - 2devnull 3y ago
    I’m saying it’s not useful in policy as measurement of poverty. Poverty is and forever will be defined by income. Wealth is used in policy like everything else, yes of course. Tax policy is a great example. Is there anything that tax policy doesn’t have loopholes and special provisions for? I’d argue that wealthy people benefit from all that. Poor people benefit from clear and effective policies that use simpler, less game-able constructs. Getting into the business of trying to define nebulous hard to define constructs like wealth will benefit those with greater resources, always.

giaour 3y ago

So, if someone has a low or nonexistent income and vast inherited wealth, you would consider them to be poor?

gambiting 3y ago
Not unheard of - people inherit great houses in fantastic locations that they have no money to keep and which they can't sell otherwise for various legal reasons. You're poor despite living in prime estate and despite theoretically having a net worth into 6 digits.
- eru 3y ago
  What kinds of legal reasons?
  - giaour 3y ago
    The property's transfer or sale may be prohibited by the terms of inheritance. IANAL and am mostly familiar with this type of situation from rom-coms about down-on-their-luck dukes who live in crumbling, unsellable castles, so I'm not sure if that scenario truly exists in law or if it's just a handy conceit.
    - kenjackson 3y ago
      I prefer the rule where you must spend $30 million dollars in 30 days, but have no trace of the money left — yet still have received fair value for your spending — in order to get the inheritance.
      - eru 3y ago
        That's pretty easy: You go to a bank to manufacture you a derivative on eg the stock market. The deal is that you pay them 30 million dollars now, and in 30 days they either pay you x dollars with probability p or you lose everything. Eg they pay you 100 million dollars, if the S&P 500 index goes above, say, 5000 which they think will happen with probability of just under 30%. If you do the math: the deal is fair. If you lose the bet, you get your inheritance. If you win the bet, you get your 100 million dollars from the bank, and presumably pay the 30 million dollars back (if that's a stipulation in the will).