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The line about the rich taking on greater risk is particularly absurd. The rich risk making less money in a recession relative to their baseline income, sure, b
by rquantz 13y ago
The line about the rich taking on greater risk is particularly absurd. The rich risk making less money in a recession relative to their baseline income, sure, but that graph doesn't seem to suggest they face destitution, which a factory worker would face by losing his job, or, until recently, many middle class Americans faced by getting sick for an extended period of time.
- spikels 13y agoIt depends on your definition of "risk". In economics, as well as business, it is usually defined as the standard deviation of the percentage change and is usually annualized. There are a whole bunch do sensible reasons for this (basically it makes various risks comparable). By this measure the rich face much higher risk than the poor when you look at either income or wealth. In the case of wealth the poor have little if any while the rich have much of their wealth in the very risky stock market (e.g. down 50% in last recession). Incomes are generally less volatile for both the rich and poor but more volatile for the rich. You are right it does not capture the impact on individuals. As far as I know there is no such measure but it would be something along the lines of the standard deviation of utility. Unfortunately any such measure would be subjective and hard to understand across more than a few individuals.