6 ms·

This headline is pretty misleading, to me at least. "Bottom 80%" implies the poorer 80% of Americans, but it is actually referring to the bottom 80% strictly in

This headline is pretty misleading, to me at least. "Bottom 80%" implies the poorer 80% of Americans, but it is actually referring to the bottom 80% strictly in terms of (apparent) savings. > Personal Income isn’t the only source of household assets. The two big missing pieces are holding (capital) gains on assets, and borrowing (which adds both assets and liabilities, in equal amounts, to household balance sheets). Adding these two additional measures does shift most bottom quintiles from spending deficits to asset surpluses in most years. > While many have suggested that borrowing is what explains households’ ability to keep spending (it is, some), overwhelmingly it’s holding gains that “fund” the perennial dissaving of the bottom 80%. So this is actually mostly explained by richer people who have significant investments in addition to their normal income. Edit: The BEA says Personal Income "does not include realized or unrealized capital gains or losses." So if you sell stocks, a house, pull money out of a 401k, none of that is included in Personal Income. Also, I think like ~20% of Americans are retired? Presumably most of them would be considered dissavers here, except for those who retired with almost no savings and are living solely on Social Security.

noboostforyou 3y ago
This got me confused as well. I read the claim and thought "how does the bottom 80% of income in the US also have a bunch of disposable income via capital gains?" Misleading title indeed.
zirror 3y ago
As a non-native speaker, I have never heard of dissaving. Is it a common word?
- burkaman 3y ago
  No, it might be common in economic circles but I've never heard it either.
- nu11ptr 3y ago
  No. I've been a native English speaker my whole life and it was a very weird sounding title IMO.
- toast0 3y ago
  As a native speaker, this is the first I can recall seeing or hearing it.
- mherkender 3y ago
  No, it's a real word but it's not commonly used. It may be more common in some specialized areas, like economics.
- jsf01 3y ago
  As a native speaker, it was my first time seeing the word, too. Not common at all.
- NotYourLawyer 3y ago
  Nope, I’d never heard it either.
- arebop 3y ago
  It is common in economics
- dylan604 3y ago
  I guess "living beyond their means" is too plebeian for snooty economic type in their ivory towers?
  - andsoitis 3y ago
    “Dissaving” is more practical: - succinct - also applied to governments
- HumblyTossed 3y ago
  It's an old word, but not a common word. Most of us (native English speakers) would never use it.
- maicro 3y ago
  As plenty of others have said - nope, dissaving is very uncommon word. As a native American English speaker, I don't recall ever seeing it either. One clue for future reference - the linked article had to clarify the meaning of the word _in the title_. That strongly indicates to me that, even if in certain areas the word is well understood, the author expected there to be confusion.
anovikov 3y ago
True! People who just keep borrowing against the value of their stocks. Never paying income tax. And their stocks keep growing.
- burkaman 3y ago
  Not just borrowing against the value, the Personal Income metric "does not include realized or unrealized capital gains or losses." So even if you sell stocks or a house or something and make money on it, that income isn't part of your Personal Income. If you're retired and pulling money out of your 401k that has been growing in value for 30 years, I think that also wouldn't be part of Personal Income and spending that money would be "dissaving" from the perspective of this post.
  - jandrewrogers 3y ago
    Most people have retirement accounts that defer income tax, like 401k and IRA, and therefore withdrawals are categorized as ordinary income for taxation purposes, not capital gains. I would not expect the average retiree to have much or any capital gains.
    - burkaman 3y ago
      You are right for tax purposes, but for this Personal Income metric I'm not sure. Looking at this: https://www.bea.gov/system/files/methodologies/SPI-Methodology.pdf https://www.bea.gov/system/files/methodologies/SPI-Methodolo... > Personal income as defined by BEA differs substantially from adjusted gross income (AGI), the principal income measure used by the Internal Revenue Service. So it explicitly is not the same as the IRS definition of income. > For the measurement of personal income, employer contributions to pension plans are counted as part of supplements to wages and salaries. Employee contributions to the plans, capital gains of the plans, and payments of benefits by the plans are not counted as part of personal income. I believe they consider a 401k to be a defined contribution pension plan. I know normally you wouldn't call a 401k a pension and you wouldn't talk about "payments of benefits" from a 401k, but in context (page 32) I think that is what they mean. So it seems like the amount your employer contributes to your 401k counts as income for that year, any additional voluntary amount you contribute doesn't count, and when you withdraw money that also doesn't count. Maybe I'm misunderstanding but that is my reading.
rconti 3y ago
Overall the methodology here sounds suspicious. It also feels like summing together income and subtracting out taxes paid across an entire quintile wouldn't work the way you'd expect, since taxes are not flat-rate.
al_borland 3y ago
>it is actually referring to the bottom 80% strictly in terms of (apparent) savings. This makes sense. It’s not about how much you make, it’s about how much you keep. Someone making $5m/year can still spend more than that. If drawing down on investments counts, I suppose the baby boomers are going to skew this number for years to come as they shift from saving for retirement to spending in retirement.
- burkaman 3y ago
  Yeah anyone who retires with non-trivial investments or savings will probably be a "dissaver" for the rest of their life.
- embersbreaking 3y ago
  No. It’s the bottom 80% of income earners. The post seems to make that perfectly clear, and explains why that measure is used.

noboostforyou 3y ago

This got me confused as well. I read the claim and thought "how does the bottom 80% of income in the US also have a bunch of disposable income via capital gains?" Misleading title indeed.

zirror 3y ago

As a non-native speaker, I have never heard of dissaving. Is it a common word?

burkaman 3y ago
No, it might be common in economic circles but I've never heard it either.
nu11ptr 3y ago
No. I've been a native English speaker my whole life and it was a very weird sounding title IMO.
toast0 3y ago
As a native speaker, this is the first I can recall seeing or hearing it.
mherkender 3y ago
No, it's a real word but it's not commonly used. It may be more common in some specialized areas, like economics.
jsf01 3y ago
As a native speaker, it was my first time seeing the word, too. Not common at all.
NotYourLawyer 3y ago
Nope, I’d never heard it either.
arebop 3y ago
It is common in economics
dylan604 3y ago
I guess "living beyond their means" is too plebeian for snooty economic type in their ivory towers?
- andsoitis 3y ago
  “Dissaving” is more practical: - succinct - also applied to governments
HumblyTossed 3y ago
It's an old word, but not a common word. Most of us (native English speakers) would never use it.
maicro 3y ago
As plenty of others have said - nope, dissaving is very uncommon word. As a native American English speaker, I don't recall ever seeing it either. One clue for future reference - the linked article had to clarify the meaning of the word _in the title_. That strongly indicates to me that, even if in certain areas the word is well understood, the author expected there to be confusion.

anovikov 3y ago

True! People who just keep borrowing against the value of their stocks. Never paying income tax. And their stocks keep growing.

burkaman 3y ago
Not just borrowing against the value, the Personal Income metric "does not include realized or unrealized capital gains or losses." So even if you sell stocks or a house or something and make money on it, that income isn't part of your Personal Income. If you're retired and pulling money out of your 401k that has been growing in value for 30 years, I think that also wouldn't be part of Personal Income and spending that money would be "dissaving" from the perspective of this post.
- jandrewrogers 3y ago
  Most people have retirement accounts that defer income tax, like 401k and IRA, and therefore withdrawals are categorized as ordinary income for taxation purposes, not capital gains. I would not expect the average retiree to have much or any capital gains.
  - burkaman 3y ago
    You are right for tax purposes, but for this Personal Income metric I'm not sure. Looking at this: https://www.bea.gov/system/files/methodologies/SPI-Methodology.pdf https://www.bea.gov/system/files/methodologies/SPI-Methodolo... > Personal income as defined by BEA differs substantially from adjusted gross income (AGI), the principal income measure used by the Internal Revenue Service. So it explicitly is not the same as the IRS definition of income. > For the measurement of personal income, employer contributions to pension plans are counted as part of supplements to wages and salaries. Employee contributions to the plans, capital gains of the plans, and payments of benefits by the plans are not counted as part of personal income. I believe they consider a 401k to be a defined contribution pension plan. I know normally you wouldn't call a 401k a pension and you wouldn't talk about "payments of benefits" from a 401k, but in context (page 32) I think that is what they mean. So it seems like the amount your employer contributes to your 401k counts as income for that year, any additional voluntary amount you contribute doesn't count, and when you withdraw money that also doesn't count. Maybe I'm misunderstanding but that is my reading.

rconti 3y ago

Overall the methodology here sounds suspicious. It also feels like summing together income and subtracting out taxes paid across an entire quintile wouldn't work the way you'd expect, since taxes are not flat-rate.

al_borland 3y ago

>it is actually referring to the bottom 80% strictly in terms of (apparent) savings. This makes sense. It’s not about how much you make, it’s about how much you keep. Someone making $5m/year can still spend more than that. If drawing down on investments counts, I suppose the baby boomers are going to skew this number for years to come as they shift from saving for retirement to spending in retirement.

burkaman 3y ago
Yeah anyone who retires with non-trivial investments or savings will probably be a "dissaver" for the rest of their life.
embersbreaking 3y ago
No. It’s the bottom 80% of income earners. The post seems to make that perfectly clear, and explains why that measure is used.