Affluence in the United States

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Affluence refers to an individual's or household's economical and financial advantage in comparison to others. It may be assessed through either income or wealth.

In absolute terms affluence is a relatively widespread phenomenon in the United States, with over 30% of households having an income exceeding $100,000 per year and over 30% of households having a net worth exceeding $250,000, as of 2019. However, when looked at in relative terms, wealth is highly concentrated: the bottom 50% of Americans only share 2% of total household wealth while the top 1% hold 35% of that wealth.

In the United States, as of 2019, the median household income is $60,030 per year and the median household net worth is $97,300, while the mean household income is $89,930 per year and the mean household net worth is $692,100.

Income vs. wealth

See also: Household income in the United States

 

Annual income and accumulated net worth, by age

Annual income of U.S. families is near its highest throughout the 35-64 age group.

 

Accumulated net worth of U.S. families peaks in the 65-74 year age group.

While income is often seen as a type of wealth in colloquial language use, wealth and income are two substantially different measures of economic prosperity. Wealth is the total value of net possessions of an individual or household, while income is the total inflow of monetary assets over a given time period. Hence the change in wealth over that time period is equal to the income minus the expenditures in that period. Income is a so-called "flow" variable, while wealth is a so-called "stock" variable.

Income as a metric

Breakdowns of individuals and households with incomes exceeding $60,000 as of 2005

The image contains several charts related to U.S. wealth inequality. While U.S. net worth roughly doubled from 2000 to 2016, the gains went primarily to the wealthy.

Affluence in the United States has been attributed in many cases to inherited wealth amounting to "a substantial head start": in September 2012, the Institute for Policy Studies found that over 60 percent of the Forbes richest 400 Americans had grown up with substantial privilege.

Income is commonly used to measure affluence, although this is a relative indicator: a middle class person with a personal income of $77,500 annually and a billionaire may both be referred to as affluent, depending on reference groups. An average American with a median income of $32,000 ($39,000 for those employed full-time between the ages of 25 and 64) when used as a reference group would justify the personal income in the tenth percentile of $77,500 being described as affluent, but if this earner were compared to an executive of a Fortune 500 company, then the description would not apply. Accordingly, marketing firms and investment houses classify those with household incomes exceeding $250,000 as mass affluent, while the threshold upper class is most commonly defined as the top 1% with household incomes commonly exceeding $525,000 annually.

According to the U.S. Census Bureau, 42% of U.S. households have two income earners, thus making households' income levels higher than personal income levels; the percent of married-couple families with children where both parents work is 59.1%.

In 2005, the economic survey revealed the following income distribution for households and individuals:

• The top 5% of individuals had six-figure incomes (exceeding $100,000); the top 10% of individuals had incomes exceeding $75,000;
• The top 5% of households, three quarters of whom had two income earners, had incomes of $166,200 (about 10 times the 2009 US minimum wage, for one income earner, and about 5 times the 2009 US minimum wage for two income earners) or higher, with the top 10% having incomes well in excess of $100,000.
• The top 0.12% of households had incomes exceeding $1,600,000 annually.

Households may also be differentiated among each other, depending on whether or not they have one or multiple income earners (the high female participation in the economy means that many households have two working members). For example, in 2005 the median household income for a two income earner households was $67,000 while the median income for an individual employed full-time with a graduate degree was in excess of $60,000, demonstrating that nearly half of individuals with a graduate degree have earnings comparable with most dual income households.

By another measure – the number of square feet per person in the home – the average home in the United States has more than 700 square feet per person, 50% – 100% more than in other high-income countries (though this indicator may be regarded as an accident of geography, climate and social preference, both within the US and beyond it) but this metric indicates even those in the lowest income percentiles enjoy more living space than the middle classes in most European nations. Similarly ownership levels of 'gadgets' and access to amenities are exceptionally high compared to many other countries.

Overall, the term affluent may be applied to a variety of individuals, households, or other entities, depending on context. Data from the U.S. Census Bureau serves as the main guideline for defining affluence. U.S. government data not only reveal the nation's income distribution but also the demographic characteristics of those to whom the term "affluent", may be applied.

Wealth

Wealth in the United States is commonly measured in terms of net worth, which is the sum of all assets, including the market value of real estate, like a home, minus all liabilities. The United States is the wealthiest country in the world.

U.S. Household and non-profit Net Worth 1959 – 2016, nominal and real (2016 dollars). It reached a record $93 trillion in Q4 2016.

For example, a household in possession of an $800,000 house, $5,000 in mutual funds, $30,000 in cars, $20,000 worth of stock in their own company, and a $45,000 IRA would have assets totaling $900,000. Assuming that this household would have a $250,000 mortgage, $40,000 in car loans, and $10,000 in credit card debt, its debts would total $300,000. Subtracting the debts from the worth of this household's assets (900,000 − $300,000 = $600,000), this household would have a net worth of $600,000. Net worth can vary with fluctuations in value of the underlying assets.

As one would expect, households with greater income often have the highest net worths, though high income cannot be taken as an always accurate indicator of net worth. Overall the number of wealthier households is on the rise, with baby boomers hitting the highs of their careers. In addition, wealth is unevenly distributed, with the wealthiest 25% of US households owning 87% of the wealth in the United States, which was $54.2 trillion in 2009.

U.S. household and non-profit organization net worth rose from $44.2 trillion in Q1 2000 to a pre-recession peak of $67.7 trillion in Q3 2007. It then fell $13.1 trillion to $54.6 trillion in Q1 2009 due to the subprime mortgage crisis. It then recovered, rising consistently to $86.8 trillion by Q4 2015. This is nearly double the 2000 level.

Mechanisms to gain wealth

Assets are known as the raw materials of wealth, and they consist primarily of stocks and other financial and non-financial property, particularly homeownership. While tangible assets are unequally distributed, financial assets are much more unequal. In 2004, the top 1% controlled 50.3% of the financial assets while the bottom 90% held only 14.4% of the total US financial assets.

These discrepancies exist because the many wealth building tools established by the Federal Government work better for high earners. These include 401k plans, 403b plans, and IRAs. Traditional IRAs, 401k and 403b plans are tax shelters created for working individuals. These plans allow for tax sheltered (or pre-tax) contributions of earned income directly to tax sheltered savings accounts. Annual contributions are capped to ensure that high earners cannot enjoy the tax benefit disproportionately. The Roth IRA is another tool that can help create wealth in the working and middle classes.

Assets in Roth IRAs grow tax free; interests, dividends, and capital gains are all exempt from income taxes. Contributions to Roth IRAs are limited to those with annual incomes less than the threshold established yearly by the IRS. The benefits of these plans, however, are only available to workers and families whose incomes and expenses allow them excess funds to commit for a long period, typically until the investor reaches age 59½. The effect of these tools are further limited by the contribution limits placed on them.

Including human capital such as skills, the United Nations International Human Dimensions Programme estimated the total wealth of the United States in 2008 to be $118 trillion.

Top percentiles of income

Affluence and economic standing within society are often expressed in terms of percentile ranking. The economic ranking is conducted either in terms of giving lower thresholds for a designated group (e.g. the top 5%, 10%, 15%, etc.) or in terms of the percentage of households/individuals with incomes above a certain threshold (e.g. above $75,000, $100,000, $150,000, etc.). The table below presents 2006 income data in terms of the lower thresholds for the given percentages (e.g. the top 25.6% of households had incomes exceeding $80,000, compared to $47,000 for the top quarter of individuals).

Data	Top third	Top quarter	Top quintile	Top 15%	Top 10%	Top 5%	Top 3%	Top 1.5%	Top 0.1%
Household income
Lower threshold (annual gross income)	$65,000	$80,000	$91,202	$100,000	$118,200	$166,200	$200,000	$250,000	$1,600,000
Exact percentage of households	34.72%	25.60%	20.00%	17.80%	10.00%	5.00%	2.67%	1.50%	0.12%
Personal income (age 25+)
Lower threshold (annual gross income)	$37,500	$47,500	$52,500	$62,500	$75,000	$100,000	N/A
Exact percentage of individuals	33.55%	24.03%	19.74%	14.47%	10.29%	5.63%	N/A

Source: U.S. Census Bureau, 2006

Household income over time

Further information: Income in the United States

Household income changes over time, with income gains being substantially larger for the upper percentiles than for the lower percentiles. All areas of the income strata have seen their incomes rise since the late 1960s, especially during the late 1990s. The overall increase in household income is not the result of an increase in the percentage of households with more than one income earner. In fact, the lowest 50% population have become very poor sharing just 2% of wealth in spite of modern social practice of more than one working person, mostly women in the household. But the myth is highly prevalent and promoted by media. The standard of living of a 1960s single working parent can only be afforded today when both parents work due to disproportionate distribution of wealth today:

In about 2003, Elizabeth Warren said that "the typical middle-class household in the United States is no longer a one-earner family, with one parent in the workforce and one at home full-time. Instead, the majority of families with small children now have both parents rising at dawn to commute to jobs so they can both pull in paychecks... Today the median income for a fully employed male is ...nearly $800 less than his counterpart of a generation ago. The only real increase in wages for a family has come from the second paycheck earned by a working mother."

Two income-earner households are more common among the top quintile of households than the general population: 2006 U.S. Census Bureau data indicates that over three quarters, 76%, of households in the top quintile, with annual incomes exceeding $91,200, had two or more income earners compared to just 42% among the general population and a small minority in the bottom three quintiles. As a result, much of the rising income inequity between the upper and lower percentiles can be explained through the increasing percentage of households with two or more incomes.

Data	2003	2000	1997	1994	1991	1988	1985	1982	1979	1976	1973	1970	1967
20th percentile	$17,984	$19,142	$17,601	$16,484	$16,580	$17,006	$16,306	$15,548	$16,457	$15,615	$15,844	$15,126	$14,002
Median (50th)	$43,318	$44,853	$42,294	$39,613	$39,679	$40,678	$38,510	$36,811	$38,649	$36,155	$37,700	$35,832	$33,338
80th percentile	$86,867	$87,341	$81,719	$77,154	$74,759	$75,593	$71,433	$66,920	$68,318	$63,247	$64,500	$60,148	$55,265
95th percentile	$154,120	$155,121	$144,636	$134,835	$126,969	$127,958	$119,459	$111,516	$111,445	$100,839	$102,243	$95,090	$88,678

Source: U.S. Census Bureau (2004): "Income, Poverty, and Health Insurance Coverage in the United States: 2003", p. 36 et seq. All figures are inflation-adjusted and given in 2003 dollars.

Income distribution over time

Relative income growth, organized by percentile classes, normalized to 1970 levels. Graph accounts for both income growth, and the hidden decline in the progressivity of the tax code at the top, the wealthiest earners having seen their effective tax rates steadily fall.

 

Same data as adjacent chart, but plotted on logarithmic scale to show absolute dollar amounts.

According to the Congressional Budget Office, between 1979 and 2007 incomes of the top 1% of Americans grew by an average of 275%. During the same time period, the 60% of Americans in the middle of the income scale saw their income rise by 40%. From 1992 to 2007 the top 400 income earners in the U.S. saw their income increase 392% and their average tax rate reduced by 37%. In 2009, the average income of the top 1% was $960,000 with a minimum income of $343,927.

During the economic expansion between 2002 and 2007, the income of the top 1% grew 10 times faster than the income of the bottom 90%. In this period 66% of total income gains went to the 1%, who in 2007 had a larger share of total income than at any time since 1928. According to PolitiFact and others, the top 400 wealthiest Americans "have more wealth than half of all Americans combined." Inherited wealth may help explain why many Americans who have become rich may have had a "substantial head start". In September 2012, according to the Institute for Policy Studies, "over 60 percent" of the Forbes richest 400 Americans "grew up in substantial privilege".

If a family has a positive net worth then it has more wealth than the combined net worth of over 30.6 million American families. This is because the bottom 25% of American families have a negative combined net worth.

Complications in interpreting income statistics

Interpreting these income statistics is complicated by several factors: membership in the top 1% changes from year to year, the IRS made large changes in the definition of adjusted gross income in 1987, and numbers for particular income ranges may be distorted by outliers (in the top segment) and failure to include transfer payments (in the lower segments).

Regarding Income Mobility, the IRS occasionally studies income data from actual households over time, usually over one decade. Their results underestimate income mobility by excluding those under age 25, the most mobile population, from their studies.

Many people look only at annual reported income data split into income quintiles. It is erroneous to assume that individual households remain in the same quintile over time, just as it usually is when using aggregate data. A majority of households in the top income quintile in one year, for example, will have moved to a lower quintile within a decade. Three out of four households in the top 0.01% of income will no longer be in that small group ten years later. In summary, half of all of U.S. households move from one income quintile to a different income quintile every decade. And actual households who started a decade in the lowest quintile of income, when tracked over the next ten years, will have proportionally more income growth than actual households who started the decade in the highest quintile of income. Thus, when comparing income/wealth quintile distributions from different time periods, generalizations can only be made with regards to the households in aggregate for each quintile, and can not be made to any individual households over the same time period (i.e. assuming the wealth value has been appropriately adjusted for differences in time, one cannot infer that a decrease in total wealth percentage for one quintile over time means that the households from that quintile have lost wealth as individuals, but only that total wealth percentage has decreased for those in that quintile at the time of measurement).

Top 20% income vs. the bottom 20% income households:

1. The average number of people with jobs in a top income quintile household is two, while a majority of bottom-income-quintile households have no-one employed.
2. If there are two adult income earners in a household who are married, their incomes are combined on tax forms. This is very common among top-quintile-income households. The lowest-quintile households, however, include a lot more single-person households, or two unmarried working adults living together and sharing expenses, but reporting their incomes to the IRS as if they were two separate households.
3. 75%...80% of actual income for bottom-quintile-households consists of specific transfer payments from social or relief programs (aka "welfare" and other benefits), which payments are not included in IRS data as income. The top income quintile gets a very small percentage of their actual income from transfer payments.
4. The IRS warns against comparisons of pre-1987 and post-1987 income data due to significant changes in the definition of adjusted gross income (AGI) that made top-quintile households appear to have large reported income gains, when in fact there was no change to their income at all. In addition to AGI changes, large marginal tax rate reductions during the Reagan Administration caused another large change in tax reporting. A lot of corporate income formerly reported on corporate tax returns was switched to lower-tax-rate individual tax returns (as Subchapter S corporations). This reporting change appeared to boost top-quintile income, when in fact their incomes had not changed. As a result, the top income quintile for households today includes a lot of corporate income previously reported in corporate tax returns, while Subchapter S corporations that lose money, are likely to be included in the bottom-income-quintile households. Income comparisons that compare pre-1987 to post-1987 income, are very common, but they are also biased, according to the IRS, and should be ignored.

Impact of age and experience: people that are older and have more experience, tend to have considerably larger incomes than younger and inexperienced workers. Normalizing for age and experience is rarely an effective statistical compensation, as each elderly citizen began as inexperienced.

Median income levels

Further information: Personal income in the United States and Household income in the United States

Wealth distribution

Net personal wealth in the U.S. since 1962

The average personal wealth of people in the top 1% is more than a thousand times that of people in bottom 50%.

 

The logarithmic scale shows how wealth has increased for all percentile groups, though moreso for wealthier people.

According to an analysis that excludes pensions and social security, the richest 1% of the American population in 2007 owned 34.6% of the country's total wealth, and the next 19% owned 50.5%. Thus, the top 20% of Americans owned 85% of the country's wealth and the bottom 80% of the population owned 15%. Financial inequality was greater than inequality in total wealth, with the top 1% of the population owning 42.7%, the next 19% of Americans owning 50.3%, and the bottom 80% owning 7%. However, according to the federal reserve, "For most households, pensions and Social Security are the most important sources of income during retirement, and the promised benefit stream constitutes a sizable fraction of household wealth" and "including pensions and Social Security in net worth makes the distribution more even". When including household wealth from pensions and social security, the richest 1% of the American population in 1992 owned 16% of the country's total wealth, as opposed to 32% when excluding pensions and social security.

After the Great Recession which started in 2007, the share of total wealth owned by the top 1% of the population grew from 34.6% to 37.1%, and that owned by the top 20% of Americans grew from 85% to 87.7%. The Great Recession also caused a drop of 36.1% in median household wealth but a drop of only 11.1% for the top 1%.

Income inequality

Main article: Income inequality in the United States

Economists and related experts have described America's growing income inequality as "deeply worrying", unjust, a danger to democracy/social stability, and a sign of national decline. Yale professor Robert Shiller, who was among three Americans who won the Nobel prize for economics in 2013, said after receiving the award, "The most important problem that we are facing now today, I think, is rising inequality in the United States and elsewhere in the world."

Changes in wealth

1989–2001

When observing the changes in the wealth among American households, one can note an increase in wealthier individuals and a decrease in the number of poor households, while net worth increased most substantially in semi-wealthy and wealthy households. Overall the percentage of households with a negative net worth (more debt than assets) declined from 9.5% in 1989 to 4.1% in 2001.

The percentage of net worths ranging from $500,000 to one million doubled while the percentage of millionaires tripled. From 1995 to 2004, there was tremendous growth among household wealth, as it nearly doubled from $21.9 trillion to $43.6 trillion, but the wealthiest quartile of the economic distribution made up 89% of this growth. During this time frame, wealth became increasingly unequal, and the wealthiest 25% became even wealthier.

According to U.S. Census Bureau statistics, this 'upward shift' is most likely the result of a booming housing market which caused homeowners to experience tremendous increases in home equity. Life-cycles have also attributed to the rising wealth among Americans. With more and more baby-boomers reaching the climax of their careers and the middle-aged population making up a larger segment of the population now than ever before, more and more households have achieved comfortable levels of wealth. Zhu Xiao Di (2004) notes, that household wealth usually peaks around families headed by people in their 50s, and as a result, the baby boomer generation reached this age range at the time of the analysis.

After 2007

Household net worth fell from 2007 to 2009 by a total of $17.5 trillion or 25.5%. This was the equivalent loss of one year of GDP. By the fourth quarter of 2010, the household net worth had recovered by a growth of 1.3 percent to a total of $56.8 trillion. An additional growth of 15.7 percent is needed just to bring the value to where it was before the recession started in December 2007. In 2014 a record breaking net worth of $80.7 trillion was achieved.

Professions

Further information: High-net-worth individual

According to the University of Chicago, the top 1% is primarily made up of owner-managers of small to medium-sized businesses of which the most profitable are physician's and dentist's offices, professional and technical services, specialty trade contracting, legal services. The typical business has $7 million in sales and 57 employees. With a 10% profit margin, this will place two business partners in the top 1%.

The remainder of the top 1% tends to be the classic professions: medicine, dentistry, law, engineering, finance, and corporate executive management.

A correlation has been shown between increases in income and increases in worker satisfaction. Increasing worker satisfaction, however, is not solely a result of the increase in income: workers in more complex and higher level occupations tend to have attained higher levels of education and thus are more likely to have a greater degree of autonomy in the workplace. Additionally, higher level workers with advanced degrees are hired to share their personal knowledge, to conceptualize, and to consult. Higher-level workers typically suffer less job alienation and reap not only external benefits in terms of income from their jobs, but also enjoy high levels of intrinsic motivation and satisfaction.

In the United States, the highest earning occupational group is referred to as white collar professionals. Individuals in this occupational classification tend to report the highest job satisfaction and highest incomes. Defining income based on title of a profession can be misleading, given that a professional title may indicate the type of education received, but does not always correlate with the actual day to day income-generating endeavors that are pursued.

Some sources cite the profession of physician in the United States as the highest paying, Physician (MD and DO) and Dentist (DMD and DDS) compensation ranks as the highest median annual earnings of all professions. Median annual earnings ranged from $149,310 for general dentists and $156,010 for family physicians to $321,686 for anesthesiologists. Surgeons post a median annual income of $282,504. However, the annual salary for Chief Executive Officer (C.E.O.) is projected quite differently based on source: Salary.com reports a median salary of $634,941, while the U.S. Department of Labor in May 2004 reported the median as $140,350. This is primarily due to a methodological difference in terms of which companies were surveyed. Overall annual earnings among the nation's top 25 professions ranged from the $70,000s to the $300,000s.

In addition to physicians, lawyers, physicists, and nuclear engineers were all among the nation's 20 highest paid occupations with incomes in excess of $78,410. Some of the other occupations in the high five-figure range were economists with a median of $72,780, mathematicians with $81,240, financial managers with $81,880, and software publishers with median annual earnings of $73,060. The median annual earnings of wage-and-salary pharmacists in May 2006 were $94,520. The median annual earnings of wage-and-salary engineers in November 2011 were $90,000. The middle 50 percent earned between $83,180 and $108,140 a year (as in the Occupational Outlook Handbook, 2008–09 Edition by the U.S. Bureau of Labor Statistics).

Education

Further information: Educational attainment in the United States

Median household and personal income by educational attainment

 

Ivy-Plus admissions rates vary with the income of the students' parents, with the acceptance rate of the top 0.1% income percentile being almost twice as much as other students.

Educational attainment plays a major factor in determining an individual's economic disposition. Personal income varied greatly according to an individual's education, as did household income.

Incomes for those employed, full-time, year-round and over the age of twenty-five ranged from $20,826 ($17,422 if including those who worked part-time) for those with less than a ninth grade education to $100,000 for those with professional degrees ($82,473 if including those who work part-time). The median income for individuals with doctorates was $79,401 ($70,853 if including those who work part-time).

These statistics reveal that the majority of those employed full-time with professional or doctoral degrees are among the overall top 10% (15% if including those who work part-time) of income earners. Of those with a master's degree, nearly 50% were among the top quarter of income earners (top third if including those who work part-time).

Religion

Individuals of a broad variety of religious backgrounds have become wealthy in America. However, the majority of these individuals follow Mainline Protestant denominations; Episcopalians and Presbyterians are most prevalent. According to a 2016 study by the Pew Research Center, Jewish again ranked as the most financially successful religious group in the United States, with 44% of Jews living in households with incomes of at least $100,000, followed by Hindu (36%), Episcopalians (35%), and Presbyterians (32%). Owing to their numbers, more Catholics (13.3 million) reside in households with a yearly income of $100,000 or more than any other religious group.

According to the same study there is a correlation between education and income, about 77% of American Hindus have an undergraduate degree and according to a study in 2020, they are earning the highest with median income $137,000, followed by Jews (59%), Episcopalians (56%), and Presbyterians (47%).

Race

See also: Racial inequality in the United States § Home ownership

Percent of households with six figure incomes and individuals with incomes in the top 10%, exceeding $77,500

Recent U.S. Census Bureau publications indicate a strong correlation between race and affluence. In the top household income quintile (households with incomes exceeding $91,200), Asian Americans and Whites were over represented, whereas Hispanics and African Americans were underrepresented.

In 2006, the household income for Asian Americans was, at $61,094, by far the highest, exceeding that of Whites ($48,554) by 26%. Over a quarter, 27.5%, of Asian American households had incomes exceeding $100,000, and another 40% had incomes of over $75,000.

Among White households, who remained near the national median, 18.3% had six figure incomes, while 28.9% had incomes exceeding $75,000. The percentages of households with incomes exceeding $100,000 and $75,000 were far below the national medians for Hispanic and African American households. Among Hispanic households, for example, only 9% had six figure incomes, and 17% had incomes exceeding $75,000. The race gap remained when considering personal income. In 2005, roughly 11% of Asian Americans and 7% of White individuals had six figure incomes, compared to 2.6% among Hispanics and 2.3% among African Americans.

The racial breakdowns of income brackets further illustrate the racial disparities associated with affluence. in 2005, 81.8% of all 114 million households were White (including White Hispanics), 12.2% were African American, 10.9% were Hispanic and 3.7% were Asian American.

While White households are always near the national median due to Whites being by far the most prevalent racial demographic, the percentages of minority households with incomes exceeding $100,000 strayed considerably from their percentage of the overall population: Asian Americans, who represent the smallest surveyed racial demographic in the overall population, were found to be the prevalent minority among six figure income households.

Among the nearly twenty million households with six figure incomes, 86.9% were White, 5.9% were Asian American, 5.6% were Hispanic and 5.5% were African American. Among the general individual population with earnings, 82.1% were White, 12.7% were Hispanic, 11.0% were African American and 4.6% were Asian American.

Of the top 10% of income earners, those nearly 15 million individuals with incomes exceeding $77,500, Whites and Asians were once again over-represented with the percentages of African Americans and Hispanics trailing behind considerably. Of the top 10% of earners, 86.7% were White. Asian Americans were the prevalent minority, constituting 6.8% of top 10% income earners, nearly twice the percentage of Asian Americans among the general population.

Hispanics, who were the prevalent minority in the general population of income earners, constituted only 5.2% of those in the top 10%, with African Americans being the least represented with 5.1%.

Race		Overall median	High school	Some college	College graduate	Bachelor's degree	Master's degree	Doctoral degree
Total population	All, age 25+	32,140	26,505	31,054	49,303	43,143	52,390	70,853
	Full-time workers, age 25–64	39,509	31,610	37,150	56,027	50,959	61,324	79,292
White alone	All, age 25+	33,030	27,311	31,564	49,972	43,833	52,318	71,268
	Full-time workers, age 25–64	40,422	32,427	38,481	56,903	51,543	61,441	77,906
Asian alone	All, age 25+	36,152	25,285	29,982	51,481	42,466	61,452	69,653
	Full-time workers, age 25–64	42,109	27,041	33,120	60,532	51,040	71,316	91,430
African American	All, age 25+	27,101	22,379	27,648	44,534	41,572	48,266	61,894
	Full-time workers, age 25–64	32,021	26,230	32,392	47,758	45,505	52,858	N/A
Hispanic or Latino	All, age 25+	23,613	22,941	28,698	41,596	37,819	50,901	67,274
	Full-time workers, age 25–64	27,266	26,461	33,120	46,594	41,831	53,880	N/A

Source: U.S. Census Bureau, 2006

Status and stratification

Economic well-being is often associated with high societal status, yet income and economic compensation are a function of scarcity and act as only one of a number of indicators of social class. It is in the interest of all of society that open positions are adequately filled with a competent occupant enticed to do his or her best. As a result, an occupation that requires a scarce skill, the attainment of which is often documented through an educational degree, and entrusts its occupant with a high degree of influence will generally offer high economic compensation.

To put it another way, the high income is intended to ensure that the desired individuals obtain the necessary skills (e.g. medical or graduate school) and complete their tasks with the necessary vigor but differences in income may, however, be found among occupations of similar sociological nature: the median annual earnings of a physician were in excess of $150,000 in May 2004, compared to $95,000 for an attorney. Both occupations require finely tuned and scarce skill sets and both are essential to the well-being of society, yet physicians out-earned attorneys and other upper middle class professionals by a wide margin as their skill-sets are deemed especially scarce.

Overall, high status positions tend to be those requiring a scarce skill and are therefore commonly far better compensated than those in the middle of the occupational strata.

...It is essential that the duties of the positions be performed with the diligence that their importance requires. Inevitably, then, a society must have, first, some kind of rewards that it can use as inducements, and, second, some way of distributing these rewards differently according to positions. The rewards and their distribution become part of the social order... If the rights and perquisites of different positions in a society must be unequal, then society must be stratified... Hence every society... must differentiate persons... and must therefore possess a certain amount of institutionalized inequality.

— Kingsley Davis & Wilbert E. Moore, "Some Principles of Stratification", republished in Social Class and Stratification

It is important to note that the above is an ideal type, a simplified model of reality using optimal circumstances. In reality other factors such as discrimination based on race, ethnicity and gender as well as aggressive political lobbying by certain professional organizations also influence personal income. An individual's personal career decisions, as well as his or her personal connections within the nation's economic institutions, are also likely to have an effect on income, status and whether or not an individual may be referred to as affluent.

In contemporary America it is a combination of all these factors, with scarcity remaining by far the most prominent one, which determine a person's economic compensation. Due to higher status professions requiring advanced and thus less commonly found skill sets (including the ability to supervise and work with a considerable autonomy), these professions are better compensated through the means of income, making high status individuals affluent, depending on reference group.

While the two paragraphs above only describe the relationship between status and personal income, household income is also often used to infer status. As a result, the dual income phenomenon presents yet another problem in equating affluence with high societal status. As mentioned earlier in the article, 42% of households have two or more income earners, and 76% of households with six figure incomes have two or more income earners. Furthermore, people are most likely to marry their professional and societal equals.

It therefore becomes apparent that the majority of households with incomes exceeding the six figure mark are the result of an economic as well as personal union between two economic equals. Today, two nurses, each making $55,000 a year, can easily out-earn a single attorney who makes the median of $95,000 annually. Despite household income rising drastically through the union of two economic equals, neither individual has advanced his or her function and position within society. Yet the household (not the individual) may have become more affluent, assuming an increase in household members does not offset the dual-income derived gains.

Academic class models

Dennis Gilbert, 2002		William Thompson & Joseph Hickey, 2005		Leonard Beeghley, 2004
Class	Typical characteristics	Class	Typical characteristics	Class	Typical characteristics
Capitalist class (1%)	Top-level executives, high-rung politicians, heirs. Ivy League education common.	Upper class (1%)	Top-level executives, celebrities, heirs; income of $500,000+ common. Ivy league education common.	The super-rich (0.9%)	Multi-millionaires whose incomes commonly exceed $3.5 million or more; includes celebrities and powerful executives/politicians. Ivy League education common.
Upper middle class (15%)	Highly-educated (often with graduate degrees), most commonly salaried, professionals and middle management with large work autonomy.	Upper middle class (15%)	Highly-educated (often with graduate degrees) professionals & managers with household incomes varying from the high 5-figure range to commonly above $100,000.	The rich (5%)	Households with net worth of $1 million or more; largely in the form of home equity. Generally have college degrees.
				Middle class (plurality/ majority?; ca. 46%)	College-educated workers with considerably higher-than-average incomes and compensation; a man making $57,000 and a woman making $40,000 may be typical.
Lower middle class (30%)	Semi-professionals and craftsmen with a roughly average standard of living. Most have some college education and are white-collar.	Lower middle class (32%)	Semi-professionals and craftsmen with some work autonomy; household incomes commonly range from $35,000 to $75,000. Typically, some college education.
Working class (30%)	Clerical and most blue-collar workers whose work is highly routinized. Standard of living varies depending on number of income earners, but is commonly just adequate. High school education.
		Working class (32%)	Clerical, pink- and blue-collar workers with often low job security; common household incomes range from $16,000 to $30,000. High school education.	Working class (ca. 40–45%)	Blue-collar workers and those whose jobs are highly routinized with low economic security; a man making $40,000 and a woman making $26,000 may be typical. High school education.
Working poor (13%)	Service, low-rung clerical and some blue-collar workers. High economic insecurity and risk of poverty. Some high school education.
		Lower class (ca. 14–20%)	Those who occupy poorly-paid positions or rely on government transfers. Some high school education.
Underclass (12%)	Those with limited or no participation in the labor force. Reliant on government transfers. Some high school education.			The poor (ca. 12%)	Those living below the poverty line with limited to no participation in the labor force; a household income of $18,000 may be typical. Some high school education.
References: Gilbert, D. (2002) The American Class Structure: In An Age of Growing Inequality. Belmont, CA: Wadsworth, ISBN 0534541100. (see also Gilbert Model); Thompson, W. & Hickey, J. (2005). Society in Focus. Boston, MA: Pearson, Allyn & Bacon; Beeghley, L. (2004). The Structure of Social Stratification in the United States. Boston, MA: Pearson, Allyn & Bacon. 1 The upper middle class may also be referred to as "Professional class" Ehrenreich, B. (1989). The Inner Life of the Middle Class. NY, NY: Harper-Collins.

Extreme affluence

The wide income discrepancies within the top 1.5% of households

See also: Category:American billionaires, Poverty in the United States, and Wealth gap

As of 2002, there were approximately 146,000 (0.1%) households with incomes exceeding $1,500,000, while the top 0.01% or 11,000 households had incomes exceeding $5,500,000. The 400 highest tax payers in the nation had gross annual household incomes exceeding $87,000,000. Household incomes for this group have risen more dramatically than for any other. As a result, the gap between those who make less than one and half million dollars annually (99.9% of households) and those who make more (0.1%) has been steadily increasing, prompting The New York Times to proclaim that the "Richest Are Leaving Even the Rich Far Behind."

The income disparities within the top 1.5% are quite drastic. While households in the top 1.5% of households had incomes exceeding $250,000, 443% above the national median, their incomes were still 2200% lower than those of the top 0.1% of households.

Wealth statistics

• Family net worth
• 
  U.S. mean family net worth by percentile of net worth (1989–2007)
   
• 
  U.S. median family net worth by percentile of net worth (1989–2007)

The total value of all U.S. household wealth in 2000 was approximately $44 trillion. Prior to the Late-2000s recession which began in December 2007 its value was at $65.9 trillion. After, it plunged to $48.5 trillion during the first quarter of 2009. The total household net worth rose 1.3% by the fourth quarter of 2009 to $54.2 trillion, indicating the American economy is recovering.

Desert (philosophy)

From Wikipedia, the free encyclopedia
https://en.wikipedia.org/wiki/Desert_(philosophy)

Desert (/dɪˈzɜːrt/) in philosophy is the condition of being deserving of something, whether good or bad. It is sometimes called moral desert to clarify the intended usage and distinguish it from the dry desert biome. It is a concept often associated with justice: that good deeds should be rewarded and evil deeds punished.

Nomenclature

Both of the English words "deserve" and "desert" derive from the Old French deservir (modern French: desservir), which has the same meaning. While "deserve" is common as a verb, the noun result "desert" is rare in colloquial speech; it is almost exclusively used in the phrase "just deserts" (e.g., "Although she was not at first arrested for the crime, she later on received her just deserts."). The alternate spelling "just desserts" is a pun on this original term.

In ordinary usage, to deserve is to earn or merit a reward or penalty. In moral philosophy, the additional distinction is generally drawn that the result is morally relevant somehow. For example, a low moral relevance example might be a person purchasing a lottery ticket and winning the grand prize; they may be entitled to the money, and they did pay for the ticket, but the moral connection is loose. A similar example might be finding valuable resources such as oil or gold on inherited land. Moderate examples might be that after working at a job, the employee is paid, or after a well-done concert, the musician receives a round of applause. Failing to pay for items or services (or paying then not receiving them) would be considered a breach of contract and expectations and has at least some moral heft. High moral relevance examples can be more abstract and less related directly to the actor's expectation, and often come up with punishments. For the job example, perhaps a very valuable employee is paid their "true" worth rather than their agreed upon salary: a bonus for someone single-handedly providing the employer exceptional value, or their salary is clawed back if the employee is an active negative for the company (perhaps they are committing embezzlement). Evildoers have bad things happen to them, even if not directly intended by a human justice system; a freak accident that wounds or kills a criminal would be considered by some to be some sort of deserved karmic justice.

Formulation

Desert claims may be generally expressed as: Thing X deserves Y in virtue of Z. For example, I (X) deserve a good grade on my test (Y) because I studied hard (Z); Cincinnati (X) deserves to be praised (Y) because it is a pretty city (Z). Some authors have added a further criterion, qualifying Z. That is, Agent X deserves Y in virtue of Z if X is responsible for Z (or, alternatively, if X is also deserving of Z). Considering this stipulation, one does not deserve respect simply because one is a human being, because one is not responsible for being a human being (Z). Arguments such as this are contentious as they suggest an untenability of intrinsic desert claims—that is, claims wherein Z means simply to be X. Less controversially, if one (X) uses steroids to win in a footrace, one is said not to deserve to win (Y) because one is not responsible for, and so does not deserve, one's enhanced physical abilities (Z).

Critique by John Rawls

One of the most controversial rejections of the concept of desert was made by the political philosopher John Rawls. Rawls, writing in the mid to late twentieth century, claimed that a person cannot claim credit for being born with greater natural endowments (such as superior intelligence or athletic abilities), as it is purely the result of the "natural lottery". Therefore, that person does not morally deserve the fruits of his or her talents and/or efforts, such as a good job or a high salary. However, Rawls was careful to explain that, even though he dismissed the concept of moral Desert, people can still legitimately expect to receive the benefits of their efforts and/or talents. The distinction here lies between Desert and, in Rawls' own words, "Legitimate Expectations".

Rawls' remarks about natural endowments provoked an often-referred response by Robert Nozick. Nozick claimed that to treat peoples' natural talents as collective assets is to contradict the very basis of the deontological liberalism Rawls wishes to defend, i.e., respect for the individual and the distinction between persons. Nozick argued that Rawls' suggestion that not only natural talents but also virtues of character are undeserved aspects of ourselves for which we cannot take credit, "...can succeed in blocking the introduction of a person's autonomous choices and actions (and their results) only by attributing everything noteworthy about the person completely to certain sorts of 'external' factors. So denigrating a person's autonomy and prime responsibility for his actions is a risky line to take for a theory that otherwise wishes to buttress the dignity and self-respect of autonomous beings."

Nozick's critique has been interpreted in different ways. The conventional understanding of it is as a libertarian assessment of procedural justice, which maintains that while it might be true that people's actions are wholly or partly determined by factors that are morally arbitrary, this is irrelevant to assignments of distributive shares. Individuals are self-owners with inviolable rights in their bodies and talents, and they have the freedom to take advantage of these regardless of whether the self-owned properties are theirs for reasons that are morally arbitrary or not.

Others have suggested that Rawls has entirely mistaken the very logic of desert. If justice is getting what one is due, then the basis of desert must ultimately be undeserved. However, desert is a relational concept that expresses a relationship between a deserved and a basis of desert. It simply destroys the character of desert to demand, as Rawls does, that the basis of desert be itself deserved. For example, if we say a man deserves some primary good because of some quality or action "Y", we can always ask, as Rawls does, "but does he deserve 'Y'?" and so on. We then either have an infinite regress of bases of desert or arrive at some basis, some beginning point, which the individual cannot claim to have deserved or to be responsible for, but only to have or have been given by nature. After all, no human being exists causa sui; even to reduce the basis of claims to the very narrow one of life itself reveals Rawls' difficulty: surely no one can "deserve" or "claim credit for" their own existence.

To demand, as Rawls does, that no just claim rest on an undeserved base simply means that we must cease speaking about justice, for on the basis of that demand there can never be any just claims - not even for equality. Rawls' analysis of justice rests on a notion of desert which violates the concept of desert and therefore does not provide a more precise notion of the bases of desert, but rather dissolves entirely the concept of desert and with it justice. The many debates over justice in political life and in philosophy concern the actual substantive question of what are the proper bases of desert. That is, underlying every conception of justice must be a claim of right, a positive claim of desert. The great failing of Rawls' argument is that he provides no substantive basis for a claim right or desert; but this failing is, paradoxically, also the source of the great appeal or excitement about Rawls' theory. His approach seems to avoid the difficulties of the traditional debates and the value questions they necessarily raise and yet seems to enable him to discuss normative questions such as justice.

Jean Hampton

Another, more unconventional interpretation of Nozick's critique is proposed by Jean Hampton. She points out that there seems to be a subterranean assumption in Nozick's rejection of Rawls' account of natural endowments as collective assets. This assumption is the idea that the choices individuals make regarding how they will use their labor and their property are ones for which they should be held responsible. People who do not work hard and invest imprudently should be held responsible for those choices and not receive assistance from an egalitarian welfare state. If they do work hard and invest well however, they should also be held responsible for those choices and allowed to reap the benefits from their strivings. Hampton asks the question "whether the ground of Nozick's conception of absolute rights is not only a conception of liberty but also a conception of moral responsibility that is […] closely associated to our notion of liberty."

There are other political philosophers who endorse the position Hampton outlines. Their main observation is that sometimes people who are badly off might be so because of their own irresponsible conduct, and the charge is that theories favoring policies of redistribution of wealth from the rich to the poor ignore this crucial point, i.e. that people might be unequally deserving because of their actions.

Consequences

Sometimes the claim is that the redistributive systems often favored by egalitarian political theorists might have disastrous consequences in that they promote sloth and allow free riding on the productive by the lazy. These arguments are instrumental in their appeal to undeservingness. They refer to the allegedly bad consequences of a redistributive social system and do not necessarily involve any reference to the moral worthiness of those who make greater efforts, wiser investments, and so on.

At other times however, the argument invokes a moral ideal holding desert valuable for its own sake. On this view, helping the undeserving and failing to help the deserving is deemed intrinsically unfair regardless of further consequences. For example, the charge against Rawls is that people actually might deserve the gains flowing from their natural endowments, or at least those they achieve by striving conscientiously.

Converse

Deserving something generally builds from some action and what should ideally result from it. Many people invert this process, consciously or unconsciously. A trivial example might be "lawbreakers deserve to go to jail", with the logical converse being "people in jail must have been lawbreakers." This may often be true but ignores the possibility of a miscarriage of justice where an entirely innocent person might be suffering. At its extremes, the converse can lead to victim blaming, where when a terrible event happens to someone, an observer concludes that it is merely just retribution for some misdeed in the past. The just-world hypothesis is the worldview that "everything happens for a reason", and that seemingly random events are actually morally fitting, if perhaps on a delayed timescale.

Political issues

Across the board, a number of industries are stratified across the genders. This is the result of a variety of factors. These include differences in education choices, preferred job and industry, work experience, number of hours worked, and breaks in employment (such as for bearing and raising children). Men also typically go into higher paid and higher risk jobs when compared to women. These factors result in 60% to 75% difference between men's and women's average aggregate wages or salaries, depending on the source. Various explanations for the remaining 25% to 40% have been suggested, including women's lower willingness and ability to negotiate salary and sexual discrimination. According to the European Commission direct discrimination only explains a small part of gender wage differences.

Larry Summers estimated in 2007 that the lower 80% of families were receiving $664 billion less income than they would be with a 1979 income distribution, or approximately $7,000 per family. Not receiving this income may have led many families to increase their debt burden, a significant factor in the 2007–2009 subprime mortgage crisis, as highly leveraged homeowners suffered a much larger reduction in their net worth during the crisis. Further, since lower income families tend to spend relatively more of their income than higher income families, shifting more of the income to wealthier families may slow economic growth.

According to a 2020 study, global earnings inequality has decreased substantially since 1970. During the 2000s and 2010s, the share of earnings by the world's poorest half doubled. Two researchers claim that global income inequality is decreasing due to strong economic growth in developing countries. According to a January 2020 report by the United Nations Department of Economic and Social Affairs, economic inequality between states had declined, but intrastate inequality has increased for 70% of the world population over the period 1990–2015. In 2015, the OECD reported in 2015 that income inequality is higher than it has ever been within OECD member nations and is at increased levels in many emerging economies. According to a June 2015 report by the International Monetary Fund (IMF):

Widening income inequality is the defining challenge of our time. In advanced economies, the gap between the rich and poor is at its highest level in decades. Inequality trends have been more mixed in emerging markets and developing countries (EMDCs), with some countries experiencing declining inequality, but pervasive inequities in access to education, health care, and finance remain.

A study by the Brandeis University Institute on Assets and Social Policy which followed the same sets of families for 25 years found that there are vast differences in wealth across racial groups in the United States. The wealth gap between Caucasian and African-American families studied nearly tripled, from $85,000 in 1984 to $236,500 in 2009. The study concluded that factors contributing to the inequality included years of home ownership (27%), household income (20%), education (5%), and familial financial support and/or inheritance (5%). In an analysis of the American Opportunity Accounts Act, a bill to introduce Baby Bonds, Morningstar reported that by 2019 white families had more than seven times the wealth of the average Black family, according to the Survey of Consumer Finances.

A 2020 report by Oxfam and the Stockholm Environment Institute says that the wealthiest 10% of the global population were responsible for more than half of global carbon dioxide emissions from 1990 to 2015, which increased by 60%. According to a 2020 report by the UNEP, overconsumption by the rich is a significant driver of the climate crisis, and the wealthiest 1% of the world's population are responsible for more than double the greenhouse gas emissions of the poorest 50% combined. Inger Andersen, in the foreword to the report, said "this elite will need to reduce their footprint by a factor of 30 to stay in line with the Paris Agreement targets." A 2022 report by Oxfam found that the business investments of the wealthiest 125 billionaires emit 393 million metric tonnes of greenhouse gas emissions annually.

Distribution of wealth

From Wikipedia, the free encyclopedia
https://en.wikipedia.org/wiki/Distribution_of_wealth

Global share of wealth by wealth group, Credit Suisse, 2021

World distribution of wealth, GDP, and population by region in the year 2000. Created with openoffice.org Calc. Data obtained from the UNU-WIDER report on worldwide distribution of household wealth: Press release. The World Distribution of Household Wealth. December 5, 2006. By James B. Davies, Susanna Sandstrom, Anthony Shorrocks, and Edward N. Wolff. Tables to the 2006 report in Excel (including Gini coefficients for 229 countries). UNU-WIDER.

The distribution of wealth is a comparison of the wealth of various members or groups in a society. It shows one aspect of economic inequality or economic heterogeneity.

The distribution of wealth differs from the income distribution in that it looks at the economic distribution of ownership of the assets in a society, rather than the current income of members of that society. According to the International Association for Research in Income and Wealth, "the world distribution of wealth is much more unequal than that of income."

For rankings regarding wealth, see list of countries by wealth equality or list of countries by wealth per adult.

Definition of wealth

Main article: Wealth

Wealth of an individual is defined as net worth, expressed as: wealth = assets − liabilities

A broader definition of wealth, which is rarely used in the measurement of wealth inequality, also includes human capital. For example, the United Nations definition of inclusive wealth is a monetary measure which includes the sum of natural, human and physical assets.

The relation between wealth, income, and expenses is: change of wealth = saving = income − consumption (expenses). If an individual has a large income but also large expenses, the net effect of that income on her or his wealth could be small or even negative.

Conceptual framework

There are many ways in which the distribution of wealth can be analyzed. One common-used example is to compare the amount of the wealth of individual at say 99 percentile relative to the wealth of the median (or 50th) percentile. This is P99/P50 is one of the potential Kuznets ratios which is the inverted U shape that indicates the relationship between the inequality and the income per capita. Another common measure is the ratio of total amount of wealth in the hand of top say 1% of the wealth distribution over the total wealth in the economy. In many societies, the richest ten percent control more than half of the total wealth.

The Pareto Distribution has often been used to mathematically quantify the distribution of wealth at the right tail (the wealth of the very rich); stating that the upper 20% owns 80%, the upper 4% owns 64%, the upper 0.8% owns 51.2%, etc. In fact, the tail of wealth distributions, similar to that of income distribution, behaves like a Pareto distribution but with a thicker tail.

Wealth over people (WOP) curves are a visually compelling way to show the distribution of wealth in a nation. WOP curves are modified distribution of wealth curves. The vertical and horizontal scales each show percentages from zero to one hundred. We imagine all the households in a nation being sorted from richest to poorest. They are then shrunk down and lined up (richest at the left) along the horizontal scale. For any particular household, its point on the curve represents how their wealth compares (as a proportion) to the average wealth of the richest percentile. For any nation, the average wealth of the richest 1/100 of households is the topmost point on the curve (people, 1%; wealth, 100%) or (p=1, w=100) or (1, 100). In the real world two points on the WOP curve are always known before any statistics are gathered. These are the topmost point (1, 100) by definition, and the rightmost point (poorest people, lowest wealth) or (p=100, w=0) or (100, 0). This unfortunate rightmost point is given because there are always at least one percent of households (incarcerated, long term illness, etc.) with no wealth at all. Given that the topmost and rightmost points are fixed ... our interest lies in the form of the WOP curve between them. There are two extreme possible forms of the curve. The first is the "perfect communist" WOP. It is a straight line from the leftmost (maximum wealth) point horizontally across the people scale to p=99. Then it drops vertically to wealth = 0 at (p=100, w=0).

The other extreme is the "perfect tyranny" form. It starts on the left at the Tyrant's maximum wealth of 100%. It then immediately drops to zero at p=2, and continues at zero horizontally across the rest of the people. That is, the tyrant and his friends (the top percentile) own all the nation's wealth. All other citizens are serfs or slaves. An obvious intermediate form is a straight line connecting the left/top point to the right/bottom point. In such a "Diagonal" society a household in the richest percentile would have just twice the wealth of a family in the median (50th) percentile. Such a society is compelling to many (especially the poor). In fact it is a comparison to a diagonal society that is the basis for the Gini values used as a measure of the disequity in a particular economy. These Gini values (40.8 in 2007) show the United States to be the third most dis-equitable economy of all the developed nations (behind Denmark and Switzerland).

More sophisticated models have also been proposed.

Theoretical approaches

To model aspects of the distribution and holdings of wealth, there have been many different types of theories used. Before the 1960s, the data regarding this was collected mostly from wealth tax and estate tax records, with further proof gathered from small unrepresentative examinations and a variety of other sources. The results from these sources tended to show that the distribution of wealth was very unequal, and that material inheritance had a big role in the matter of wealth differences and in the transmission of the status of wealth from generation to generation. There was also reason to believe that the inequality in wealth was shrinking over time, and also the distribution's shape demonstrated particular statistical regularities that could not have been caused by coincidence. Thus, early theoretical work on the distribution of wealth wanted to explain the statistical regularities, and also comprehend the relationship of basic forces which could be an explanation for the concentration of wealth to be high and the trend of declining over time.

More lately, the research about wealth distribution has moved away from the worry with overall distributional characteristics, and in its place focuses more on the grounds of individual differences in the holdings of wealth. This change was caused partly because the importance of saving for retirement increased, and it is reflected in the vital role now assigned to the model of lifecycle savings developed by Modigliani and Brumberg (1954), and Ando and Modigliani (1963). Another important progress has been the increase in availability and finesse in sets of micro-data, which offer not just estimations of individuals' asset holdings and savings but also a variety of other household and personal characteristics that can assist in explain the differences in wealth.

Wealth inequality

See also: Criticism of capitalism

Wealth inequality refers to uneven distribution of wealth among individuals and entities. Although most research depends on written sources, archaeologists and anthropologists often view large houses as occupied by wealthy households. The distribution of contemporaneous house sizes in a society (perhaps analyzed using the Gini coefficient) then can regarded as a measure of wealth inequality. This approach has been used at least since 2014 and has shown, for example, that ancient wealth disparities in Eurasia were greater than those in North America and in Mesoamerica following the earliest Neolithic period.

Global inequality statistics

Share of wealth globally by year, as seen by Oxfam, based on the net worth

A study by the World Institute for Development Economics Research at United Nations University reports that the richest 1% of adults alone owned 40% of global assets in the year 2000, and that the richest 10% of adults accounted for 85% of the world total. The bottom half of the world adult population owned 1% of global wealth. A 2006 study found that the richest 2% own more than half of global household assets. The Pareto distribution gives 52.8% owned by the upper 1%.

According to the OECD in 2012 the top 0.6% of world population (consisting of adults with more than US$1 million in assets) or the 42 million richest people in the world held 39.3% of world wealth. The next 4.4% (311 million people) held 32.3% of world wealth. The bottom 95% held 28.4% of world wealth. The large gaps of the report get by the Gini index to 0.893, and are larger than gaps in global income inequality, measured in 2009 at 0.38. For example, in 2012 the bottom 60% of the world population held the same wealth in 2012 as the people on Forbes' Richest list consisting of 1,226 richest billionaires of the world.

A 2021 Oxfam report found that collectively, the 10 richest men in the world owned more than the combined wealth of the bottom 3.1 billion people, almost half of the entire world population. Their combined wealth doubled during the pandemic.

‘Global wealth Report 2021’, published by Credit Suisse, shows a substantial worldwide increase in wealth inequality during 2020. According to Credit Suisse, wealth distribution pyramid in 2020 shows that the richest group of adult population (1.1%) owns 45.8% of the total wealth. When compared to the 2013 wealth distribution pyramid, an overall increase of 4.8% can be seen. The bottom half of the world’s total adult population, the bottom quartile in the pyramid, owns only 1.3% of the total wealth. Again, when compared to the 2013 wealth distribution pyramid, a decrease of 1.7% can be observed. In conclusion, this comparison shows a substantial worldwide increase in wealth inequality over these years.

One of the main explanations for the ongoing increase of wealth inequality are the repercussions of the COVID-19 pandemic. Credit Suisse claims that the economic impact of the pandemic on employment and incomes in 2020 are likely to have a negative effect for the lowest groups of wealth holders, forcing them to spend more from their savings or incur higher debt. On the other hand, top wealth groups appeared to be relatively unaffected in this negative way. Moreover, they seemed to benefit from the impact of lower interest rates on share and house prices.

According to the ‘Global Wealth Report 2021’ published by Credit Suisse, there are 56 million millionaires in the world in 2020, increasing by 5.2 million from a year earlier. The biggest number of dollar millionaires is reported in the USA, with 22 million millionaires (approximately 39% of the world total). This is far ahead of China, holding second place, with 9.4% of all global millionaires. The third place is currently being held by Japan, with 6.6% of all global millionaires.

Real estate

While sizeable numbers of households own no land, few have no income. For example, the top 10% of land owners (all corporations) in Baltimore, Maryland own 58% of the taxable land value. The bottom 10% of those who own any land own less than 1% of the total land value. This form of analysis as well as Gini coefficient analysis has been used to support land value taxation.

Wealth distribution pyramid

Pyramid of global wealth distribution in 2013

In 2013, Credit Suisse prepared a wealth pyramid infographic (shown right). Personal assets were calculated in net worth, meaning wealth would be negated by having any mortgages. It has a large base of low wealth holders, alongside upper tiers occupied by progressively fewer people. In 2013 Credit-suisse estimate that 3.2 billion individuals – more than two thirds of adults in the world – have wealth below US$10,000. A further one billion (adult population) fall within the 10,000 – US$100,000 range. While the average wealth holding is modest in the base and middle segments of the pyramid, their total wealth amounts to US$40 trillion, underlining the potential for novel consumer products and innovative financial services targeted at this often neglected segment.

The pyramid shows that:

• half of the world's net wealth belongs to the top 1%,
• top 10% of adults hold 85%, while the bottom 90% hold the remaining 15% of the world's total wealth,
• top 30% of adults hold 97% of the total wealth.

Wealth distribution pyramid in 2020

In 2020, Credit Suisse created an updated wealth pyramid infographic. The infographic was constructed similarly to the pyramid in 2013, thus personal assets were calculated in net worth. In 2020, Credit Suisse estimated that approximately 2.88 billion people (55% of adult population) have wealth below US$10,000. Further, 1.7 billion individuals (38.2% of adult population) have wealth within the range of 10,000 – US$100,000. To continue, 583 million people have wealth within the range of 100,000 – US$1,000,000 and approximately 56 million people (1.1% of adult population) have wealth over US$1,000,000.

Comparison of 2013 and 2020 pyramids

Vast differences between 2013 and 2020 infographic can be observed. For the first time, more than 1% of all global adults have wealth over US$1,000,000. Credit Suisse explains in the ‘Global Wealth Report 2021’, that this increase reflects the economic disruption caused by the pandemic and disconnect between the improvement in the financial and real assets of households. However, the biggest difference can be seen in the 10,000 – US$100,000 segment. Since 2013, there had been an increase of almost 10% of total adult population. According to Credit Suisse, the number of adults in this segment tripled since 2000. Credit Suisse explains this fact by stating that this increase was a result of growing prosperity of emerging economies, especially China, and the expansion of the middle class in the developing world. The upper-middle segment, with wealth in a range of 100,000 – US$1,000,000 has increased by 3.4%. Credit Suisse in the report states that the middle class in developed countries typically belong to this group.

Wealth outlook for 2020-2025

According to the ‘Global wealth Report 2021’, published by Credit Suisse, global wealth is projected to rise by 39% over the next five years reaching USD 583 trillion by 2025. Wealth per adult is also projected to increase by 31% and so is the number of global millionaires. The wealth pyramid, an infographic used to determine wealth distribution, will also change. The bottom segment covering adults with a net worth below USD 10,000 will likely decrease by approximately 108 million over the next five years. The lower-middle segment of the pyramid containing adults with a net worth in the range of USD 10,000 and USD 100,000 is projected to rise by 237 million adults. Most of these new members are most likely to be from lower-income countries. The upper-middle segment, consisting of adults with wealth between USD 100,000 and USD 1 million is projected to rise by 178 million adults. Most of these new members (approximately 114 million) are likely to come from upper-middle-income countries. Number of global millionaires is also projected to increase. According to the estimates made by Credit Suisse, the number of global millionaires could exceed 84 million by 2025, a rise of almost 28 million from 2020. The increase of millionaires will not only occur in developed countries such as the USA or other developed countries in Europe, but it is also expected to rapidly increase in lower-income countries. The biggest increase is expected in China, with a change of 92.7%, which is about 4.8 million new dollar millionaires. As a consequence, the number of Ultra High Net Worth Individuals (UHNWI) with net worth exceeding USD 50 million, will also increase.

Gini Coefficient

Gini coefficient is often used to determine wealth inequality. According to the Credit Suisse ‘Global wealth Report 2021’, Brunei had the highest Gini coefficient in 2021 (91.6%), therefore the wealth distribution in Brunei is vastly unequal. Slovenia had the lowest Gini coefficient in 2021 (50.3%) out of all countries, which makes Slovenia the most equal country in terms of wealth distribution. When compared to the report made by Credit Suisse in 2019, an increasing trend of wealth inequality can be observed. This may be the result of repercussions of the Covid-19 pandemic. The biggest increase was recorded in Brazil. The Gini coefficient in 2019 was 88.2% and 89% in 2021, with an increase of 0.8% over this period.

This table was created from information provided by the Credit Suisse Research Institute's "Global Wealth Databook", Table 3-1, published 2021.

Country	Adults (In 1,000)	Wealth per adult (USD)		Distribution of adults (%) by wealth range (USD)				Gini (%)
		Mean	Median	Under 10k	10k – 100k	100k – 1M	Over 1M
Afghanistan	18,356	1,744	734	97.6	2.4	0.1	0.0	72.8
Albania	2,187	30,524	15,363	41.0	54.2	4.7	0.1	68.2
Algeria	27,620	8,871	2,302	87.0	11.7	1.2	0.1	84.8
Angola	14,339	3,529	1,131	93.5	6.2	0.2	0.0	80.6
Argentina	30,799	7,224	2,157	88.2	11.2	0.6	0.0	81.2
Armenia	2,176	22,573	9,411	52.3	44.0	3.5	0.1	73.0
Australia	19,159	483,755	238,072	9.8	20.7	60.0	9.4	65.6
Austria	7,271	290,348	91,833	14.2	36.9	44.1	4.8	73.5
Azerbaijan	7,155	11,926	5,022	73.5	25.2	1.3	0.0	72.7
Bahamas	278	56,737	7,507	54.0	39.7	5.7	0.6	91.4
Bahrain	1,318	87,559	14,520	45.0	48.0	6.1	0.9	88.9
Bangladesh	106,060	7,837	3,062	84.6	14.6	0.7	0.0	75.2
Barbados	221	63,261	21,071	41.0	46.0	12.4	0.6	80.4
Belarus	7,367	23,278	12,168	45.9	51.3	2.8	0.1	66.7
Belgium	8,993	351,327	230,548	11.9	20.1	62.3	5.7	60.3
Belize	245	10,364	3,015	82.0	16.6	1.4	0.0	83.4
Benin	5,839	2,558	890	95.6	4.3	0.1	0.0	78.2
Bolivia	7,088	12,286	3,804	78.1	20.5	1.3	0.1	81.0
Bosnia and Herzegovina	2,637	30,597	15,283	41.0	54.1	4.8	0.1	68.6
Botswana	1,358	15,598	3,680	80.0	16.8	3.1	0.1	87.3
Brazil	153,307	18,272	3,469	79.5	17.5	2.8	0.1	89.0
British Caribbean	567	45,109	14,684	44.0	47.7	7.9	0.4	80.8
Brunei	309	39,098	5,122	64.0	32.1	3.5	0.4	91.6
Bulgaria	5,586	36,443	17,403	38.7	54.9	6.2	0.2	70.1
Burkina Faso	9,480	1,681	622	98.0	1.9	0.1	0.0	76.8
Burundi	5,381	728	281	99.5	0.5	0.0	0.0	75.1
Cambodia	10,180	5,895	2,031	90.7	8.7	0.6	0.0	78.7
Cameroon	12,716	3,042	941	94.3	5.5	0.2	0.0	81.6
Canada	29,934	332,323	125,688	20.7	25.1	48.6	5.6	71.9
Central African Republic	2,161	840	212	98.8	1.2	0.0	0.0	85.9
Chad	7,059	1,117	355	98.7	1.3	0.1	0.0	80.6
Chile	14,259	53,591	17,747	39.1	51.6	8.8	0.5	79.7
China	1,104,956	67,771	24,067	20.9	66.1	12.5	0.5	70.4
Colombia	35,612	16,928	4,854	72.0	25.4	2.5	0.1	82.7
Comoros	447	5,397	1,466	91.5	7.9	0.6	0.0	84.8
Congo, Dem. Rep.	39,740	1,240	356	98.3	1.6	0.1	0.0	83.2
Congo, Rep.	2,707	2,180	582	95.6	4.2	0.1	0.0	84.7
Costa Rica	3,696	44,337	14,662	44.0	47.4	8.4	0.3	79.9
Croatia	3,303	69,140	34,945	27.0	57.0	15.5	0.5	68.5
Cyprus	679	142,304	35,300	23.0	57.0	18.3	1.7	80.7
Czechia	8,528	78,103	23,794	29.6	55.7	14.0	0.7	77.7
Denmark	4,557	376,069	165,622	15.4	25.4	52.5	6.7	73.6
Djibouti	618	3,112	1,077	94.0	6.0	0.0	0.0	78.8
Dutch Caribbean	258	40,909	16,810	40.0	52.7	7.1	0.2	69.1
Ecuador	11,361	17,151	5,444	69.9	27.9	2.1	0.1	80.8
Egypt	59,547	19,468	6,329	66.5	30.7	2.6	0.1	79.2
El Salvador	4,201	34,003	11,372	47.6	46.0	6.2	0.2	79.1
Equatorial Guinea	776	18,246	4,561	77.0	18.8	4.1	0.1	86.3
Eritrea	1,728	2,846	1,086	95.2	4.7	0.1	0.0	75.7
Estonia	1,044	77,817	38,901	30.5	53.5	15.3	0.7	73.8
Ethiopia	57,104	3,540	1,527	94.4	5.4	0.2	0.0	71.1
Fiji	564	15,708	5,764	69.0	28.3	2.6	0.1	77.4
Finland	4,373	167,711	73,775	27.8	35.2	35.1	1.9	74.0
France	49,967	299,355	133,559	14.8	27.0	53.3	4.9	70.0
French Caribbean	631	68,443	23,740	36.0	44.0	19.5	0.5	73.8
Gabon	1,216	13,696	4,685	74.0	24.5	1.4	0.1	79.3
Gambia	1,115	2,500	658	94.9	4.9	0.2	0.0	84.9
Georgia	2,959	14,162	4,223	77.7	20.7	1.5	0.1	81.3
Germany	68,015	268,681	65,374	10.6	45.2	39.8	4.3	77.9
Ghana	16,617	6,132	2,198	88.5	11.1	0.4	0.0	77.5
Greece	8,462	104,603	57,595	22.1	49.3	27.7	0.9	65.7
Guinea	6,078	2,942	938	94.5	5.4	0.2	0.0	80.8
Guinea-Bissau	949	1,828	670	97.0	3.0	0.0	0.0	77.6
Guyana	497	12,280	4,637	74.0	24.6	1.4	0.0	76.5
Haiti	6,621	767	193	99.2	0.7	0.0	0.0	85.2
Hong Kong	6,292	503,335	173,768	13.7	23.7	54.3	8.3	74.6
Hungary	7,769	53,664	24,126	21.4	67.6	10.7	0.3	66.5
Iceland	255	337,787	231,462	6.0	18.0	70.7	5.3	50.9
India	900,443	14,252	3,194	77.2	21.1	1.7	0.1	82.3
Indonesia	180,782	17,693	4,693	67.2	30.8	1.9	0.1	77.7
Iran	57,987	22,249	7,621	59.1	37.1	3.7	0.1	78.6
Iraq	21,247	14,506	6,378	68.3	30.1	1.6	0.1	71.0
Ireland	3,619	266,153	99,028	30.8	19.7	44.5	5.0	80.0
Israel	5,626	228,268	80,315	15.8	41.2	40.1	2.9	73.4
Italy	49,746	239,244	118,885	15.5	30.1	51.4	3.0	66.5
Jamaica	2,041	19,893	5,976	66.7	30.3	2.9	0.1	82.0
Japan	104,953	256,596	122,980	11.0	32.6	52.9	3.5	64.4
Jordan	5,866	28,316	10,842	48.3	47.1	4.5	0.2	75.9
Kazakhstan	12,226	33,463	12,029	46.3	49.3	4.2	0.2	76.4
Kenya	27,473	12,313	3,683	79.6	18.8	1.5	0.1	82.2
Korea, South	42,490	211,369	89,671	14.8	38.3	44.4	2.5	67.6
Kuwait	3,146	129,890	28,698	42.8	44.0	10.7	2.5	86.5
Kyrgyzstan	3,927	5,816	2,238	89.7	9.8	0.5	0.0	75.7
Laos	4,288	7,379	1,610	91.6	7.0	1.3	0.0	87.9
Latvia	1,477	70,454	33,884	36.0	50.5	12.7	0.8	80.9
Lebanon	4,548	55,007	18,159	40.6	50.5	8.4	0.5	79.7
Lesotho	1,243	1,226	264	97.8	2.2	0.1	0.0	88.6
Liberia	2,502	4,453	1,464	91.9	7.8	0.3	0.0	80.1
Libya	4,440	17,198	6,512	67.0	31.0	1.9	0.1	76.0
Lithuania	2,166	63,500	29,679	29.3	58.0	12.2	0.5	71.0
Luxembourg	498	477,306	259,899	13.0	19.0	59.2	8.8	67.0
Madagascar	13,812	1,962	666	96.9	3.0	0.1	0.0	79.3
Malawi	8,887	2,045	606	96.2	3.7	0.1	0.0	82.4
Malaysia	22,315	29,287	8,583	55.0	41.1	3.7	0.2	82.9
Maldives	409	25,511	8,519	56.0	39.3	4.5	0.2	79.8
Mali	8,625	2,424	869	96.0	3.9	0.1	0.0	77.6
Malta	358	148,934	84,390	13.0	45.0	40.6	1.4	61.7
Mauritania	2,370	2,788	1,037	95.2	4.7	0.1	0.0	76.3
Mauritius	968	63,372	27,456	31.0	56.0	12.5	0.5	72.1
Melanesia	711	31,106	12,183	46.0	48.6	5.2	0.2	75.8
Mexico	85,136	42,689	13,752	44.7	46.9	8.1	0.3	80.5
Micronesia	341	13,193	4,876	74.0	23.9	2.1	0.0	77.9
Moldova	3,188	15,491	7,577	61.8	36.5	1.7	0.0	69.4
Mongolia	2,053	6,324	2,546	88.0	11.5	0.5	0.0	74.4
Montenegro	476	60,310	30,739	29.0	57.0	13.6	0.4	68.4
Morocco	24,654	13,459	3,874	78.4	19.7	1.9	0.1	81.9
Mozambique	14,186	1,003	345	98.9	1.0	0.1	0.0	79.1
Myanmar	35,734	5,025	2,458	91.7	8.0	0.3	0.0	67.0
Namibia	1,375	15,294	3,677	80.5	16.4	3.0	0.1	86.6
Nepal	17,887	4,056	1,437	93.3	6.3	0.3	0.0	78.1
Netherlands	13,462	377,092	136,105	13.6	29.4	49.3	7.7	75.3
New Zealand	3,600	348,198	171,624	21.2	20.0	52.5	6.3	69.9
Nicaragua	4,107	12,239	3,694	78.2	20.5	1.3	0.1	81.0
Niger	9,739	1,287	492	98.7	1.3	0.1	0.0	75.6
Nigeria	95,931	6,451	1,474	91.7	7.6	0.7	0.0	85.8
Norway	4,184	275,880	117,798	28.0	19.0	48.8	4.2	78.5
Oman	3,765	39,434	9,886	50.5	43.1	6.0	0.4	86.7
Pakistan	123,522	5,258	2,187	90.5	9.2	0.4	0.0	73.2
Panama	2,843	43,979	13,147	45.3	46.6	7.8	0.3	82.5
Papua New Guinea	4,941	6,710	1,790	91.3	7.7	1.0	0.0	84.3
Paraguay	4,454	11,962	3,644	78.8	19.9	1.2	0.1	81.6
Peru	22,530	17,017	5,445	70.4	27.4	2.1	0.1	80.1
Philippines	66,960	15,290	3,155	83.1	14.8	2.0	0.1	86.9
Poland	30,315	67,477	23,550	19.8	64.8	14.9	0.5	70.7
Polynesia	423	37,998	14,076	44.0	49.3	6.4	0.3	77.9
Portugal	8,339	142,537	61,306	23.2	45.1	30.0	1.6	70.5
Qatar	2,396	146,730	83,680	12.0	45.3	41.7	1.0	58.1
Romania	15,208	50,009	23,675	32.1	58.5	9.1	0.3	70.1
Russia	111,845	27,162	5,431	72.8	23.8	3.1	0.2	87.8
Rwanda	6,581	4,188	1,266	92.8	6.9	0.3	0.0	81.9
Sao Tome and Principe	104	4,029	1,702	92.4	7.3	0.2	0.0	73.1
Saudi Arabia	24,186	68,697	15,495	46.4	44.4	8.2	1.0	86.7
Senegal	7,975	4,702	1,570	91.4	8.3	0.3	0.0	79.7
Serbia	5,480	31,705	14,954	41.7	52.9	5.3	0.1	70.6
Seychelles	69	63,427	24,651	36.0	51.0	12.5	0.5	75.9
Sierra Leone	3,937	995	370	99.0	0.9	0.0	0.0	76.7
Singapore	4,887	332,995	86,717	16.2	38.6	39.7	5.5	78.3
Slovakia	4,346	68,059	45,853	11.6	69.8	18.4	0.2	50.3
Slovenia	1,672	120,173	67,961	18.0	53.0	28.2	0.8	67.1
South Africa	37,590	20,308	4,523	75.8	20.2	3.9	0.2	88.0
Spain	37,798	227,122	105,831	16.7	31.6	48.6	3.0	69.2
Sri Lanka	14,732	23,832	8,802	54.3	42.0	3.7	0.1	76.8
Sudan	21,941	1,014	383	99.0	0.9	0.1	0.0	75.9
Suriname	382	5,644	1,349	91.2	8.1	0.7	0.0	87.1
Sweden	7,794	336,166	89,846	34.0	18.4	40.3	7.3	87.2
Switzerland	6,958	673,962	146,733	11.9	33.7	43.2	11.2	78.1
Syria	10,811	2,197	807	96.3	3.6	0.1	0.0	77.2
Taiwan	19,633	238,862	93,044	13.9	38.6	44.4	3.1	70.8
Tajikistan	5,227	4,390	1,844	92.4	7.3	0.3	0.0	73.1
Tanzania	27,744	3,647	1,433	93.7	6.1	0.2	0.0	74.5
Thailand	54,054	25,292	8,036	55.5	41.9	2.5	0.2	77.1
Timor-Leste	689	5,185	2,838	91.4	8.3	0.3	0.0	62.6
Togo	4,084	1,484	468	98.0	2.0	0.1	0.0	81.2
Trinidad and Tobago	1,032	44,182	15,649	42.5	49.0	8.2	0.3	78.0
Tunisia	8,207	17,550	6,177	67.4	30.2	2.3	0.1	77.8
Turkey	57,768	27,466	8,001	57.6	38.8	3.4	0.2	81.8
Turkmenistan	3,722	20,328	9,030	54.0	43.2	2.7	0.1	70.6
Uganda	19,830	1,994	646	96.6	3.3	0.1	0.0	80.4
Ukraine	34,639	13,104	2,529	79.1	19.5	1.3	0.1	84.4
United Arab Emirates	8,053	115,476	21,613	45.1	46.0	6.8	2.1	88.8
United Kingdom	52,568	290,754	131,522	18.0	27.8	49.5	4.7	71.7
United States	249,969	505,421	79,274	26.3	28.5	36.4	8.8	85.0
Uruguay	2,530	60,914	22,088	37.0	51.3	11.2	0.4	77.2
Venezuela	18,359	21,040	7,341	60.5	36.8	2.5	0.1	78.1
Vietnam	68,565	14,075	4,559	76.3	21.9	1.8	0.1	80.2
Yemen	15,281	5,581	1,223	93.0	6.2	0.8	0.0	88.0
Zambia	8,331	3,068	692	94.3	5.5	0.2	0.0	87.7
Zimbabwe	7,086	7,131	2,356	86.9	12.5	0.6	0.0	79.8

Geographical distribution

Main articles: World distribution of wealth, List of countries by distribution of wealth, and List of countries by income equality

Wealth is unevenly distributed across different world regions. At the end of the 20th century, wealth was concentrated among the G8 and Western industrialized nations, along with several Asian and OPEC nations. In the 21st century, wealth is still concentrated among the G8 with United States of America leading with 30.2%, along with other developed countries, several Asia-pacific countries and OPEC countries.

Countries by total wealth (trillions USD), Credit Suisse

• 
  World distribution of wealth by country (PPP)
• 
  World distribution of wealth by region (PPP)
• 
  World distribution of wealth by country (exchange rates)
• 
  World distribution of wealth by region (exchange rates)

Worlds regions by total wealth (in trillions USD), 2018

By region

Region	Proportion of world (%)
	Population	Net worth		GDP
		PPP	Exchange rates	PPP	Exchange rates
North America	5.2	27.1	34.4	23.9	33.7
Central/South America	8.5	6.5	4.3	8.5	6.4
Europe	9.6	26.4	29.2	22.8	32.4
Africa	10.7	1.5	0.5	2.4	1.0
Middle East	9.9	5.1	3.1	5.7	4.1
Asia	52.2	29.4	25.6	31.1	24.1
Other	3.2	3.7	2.6	5.4	3.4
Totals (rounded)	100%	100%	100%	100%	100%

World distribution of financial wealth. In 2007, 147 companies controlled nearly 40 percent of the monetary value of all transnational corporations.

In the United States

See also: Wealth inequality in the United States, Income inequality in the United States, and Affluence in the United States

 

Net personal wealth in the U.S. since 1962

The average personal wealth of people in the top 1% is more than a thousand times that of people in bottom 50%.

 

The logarithmic scale shows how wealth has increased for all percentile groups, though more so for wealthier people.

Average net worth—which heavily weights extremely high-wealth families—substantially exceeds median net worth (families in the fiftieth percentile). Further, average net worth outgrew median net worth from 2019 through 2022.

According to PolitiFact, in 2011 the 400 wealthiest Americans "have more wealth than half of all Americans combined." Inherited wealth may help explain why many Americans who have become rich may have had a "substantial head start". In September 2012, according to the Institute for Policy Studies, "over 60 percent" of the Forbes richest 400 Americans "grew up in substantial privilege".

In 2007, the richest 1% of the American population owned 34.6% of the country's total wealth (excluding human capital), and the next 19% owned 50.5%. The top 20% of Americans owned 85% of the country's wealth and the bottom 80% of the population owned 15%. From 1922 to 2010, the share of the top 1% varied from 19.7% to 44.2%, the big drop being associated with the drop in the stock market in the late 1970s. Ignoring the period where the stock market was depressed (1976–1980) and the period when the stock market was overvalued (1929), the share of wealth of the richest 1% remained extremely stable, at about a third of the total wealth. Financial inequality was greater than inequality in total wealth, with the top 1% of the population owning 42.7%, the next 19% of Americans owning 50.3%, and the bottom 80% owning 7%. However, after the Great Recession which started in 2007, the share of total wealth owned by the top 1% of the population grew from 34.6% to 37.1%, and that owned by the top 20% of Americans grew from 85% to 87.7%. The Great Recession also caused a drop of 36.1% in median household wealth but a drop of only 11.1% for the top 1%, further widening the gap between the 1% and the 99%.

Dan Ariely and Michael Norton show in a study (2011) that US citizens across the political spectrum significantly underestimate the current US wealth inequality and would prefer a more egalitarian distribution of wealth, raising questions about ideological disputes over issues like taxation and welfare.

Wealth proportion by population by year (including homes)

Year	Bottom 99%	Top 1%
1922	63.3%	36.7%
1929	55.8%	44.2%
1933	66.7%	33.3%
1939	63.6%	36.4%
1945	70.2%	29.8%
1949	72.9%	27.1%
1953	68.8%	31.2%
1962	68.2%	31.8%
1965	65.6%	34.4%
1969	68.9%	31.1%
1972	70.9%	29.1%
1976	80.1%	19.9%
1979	79.5%	20.5%
1981	75.2%	24.8%
1983	69.1%	30.9%
1986	68.1%	31.9%
1989	64.3%	35.7%
1992	62.8%	37.2%
1995	61.5%	38.5%
1998	61.9%	38.1%
2001	66.6%	33.4%
2004	65.7%	34.3%
2007	65.4%	34.6%
2010	64.6%	35.4%

Wealth inequality in the United States increased from 1989 to 2013.

Wealth concentration

Wealth concentration is a process by which created wealth, under some conditions, can become concentrated by individuals or entities. Those who hold wealth have the means to invest in newly created sources and structures of wealth, or to otherwise leverage the accumulation of wealth, and are thus the beneficiaries of even greater wealth.

Economic conditions

Global share of wealth by wealth group

The first necessary condition for the phenomenon of wealth concentration to occur is an unequal initial distribution of wealth. The distribution of wealth throughout the population is often closely approximated by a Pareto distribution, with tails which decay as a power-law in wealth. (See also: Distribution of wealth and Economic inequality). According to PolitiFact and others, the 400 wealthiest Americans had "more wealth than half of all Americans combined." Inherited wealth may help explain why many Americans who have become rich may have had a "substantial head start". In September 2012, according to the Institute for Policy Studies, "over 60 percent" of the Forbes 400 Richest Americans "grew up in substantial privilege".

The second condition is that a small initial inequality must, over time, widen into a larger inequality. This is an example of positive feedback in an economic system. A team from Jagiellonian University produced statistical model economies showing that wealth condensation can occur whether or not total wealth is growing (if it is not, this implies that the poor could become poorer).

Joseph E. Fargione, Clarence Lehman and Stephen Polasky demonstrated in 2011 that chance alone, combined with the deterministic effects of compounding returns, can lead to unlimited concentration of wealth, such that the percentage of all wealth owned by a few entrepreneurs eventually approaches 100%.

Correlation between being rich and earning more

Given an initial condition in which wealth is unevenly distributed (i.e., a "wealth gap"), several non-exclusive economic mechanisms for wealth condensation have been proposed:

• A correlation between being rich and being given high-paid employment (oligarchy).
• A marginal propensity to consume low enough that high incomes are correlated with people who have already made themselves rich (meritocracy).
• The ability of the rich to influence government disproportionately to their favor thereby increasing their wealth (plutocracy).

In the first case, being wealthy gives one the opportunity to earn more through high paid employment (e.g., by going to elite schools). In the second case, having high paid employment gives one the opportunity to become rich (by saving your money). In the case of plutocracy, the wealthy exert power over the legislative process, which enables them to increase the wealth disparity. An example of this is the high cost of political campaigning in some countries, in particular in the US (more generally, see also plutocratic finance).

Because these mechanisms are non-exclusive, it is possible for all three explanations to work together for a compounding effect, increasing wealth concentration even further. Obstacles to restoring wage growth might have more to do with the broader dysfunction of a dollar dominated political system particular to the US than with the role of the extremely wealthy.

Counterbalances to wealth concentration include certain forms of taxation, in particular wealth tax, inheritance tax and progressive taxation of income. However, concentrated wealth does not necessarily inhibit wage growth for ordinary workers with low wages.

Markets with social influence

Product recommendations and information about past purchases have been shown to influence consumers choices significantly whether it is for music, movie, book, technological, and other type of products. Social influence often induces a rich-get-richer phenomenon (Matthew effect) where popular products tend to become even more popular.

Redistribution of wealth and public policy

See also: Redistribution of income and wealth and Wealth distribution by country

In many societies, attempts have been made, through property redistribution, taxation, or regulation, to redistribute wealth, sometimes in support of the upper class, and sometimes to diminish economic inequality.

Examples of this practice go back at least to the Roman republic in the third century B.C., when laws were passed limiting the amount of wealth or land that could be owned by any one family. Motivations for such limitations on wealth include the desire for equality of opportunity, a fear that great wealth leads to political corruption, to the belief that limiting wealth will gain the political favor of a voting bloc, or fear that extreme concentration of wealth results in rebellion. Various forms of socialism attempt to diminish the unequal distribution of wealth and thus the conflicts and social problems arising from it.

During the Age of Reason, Francis Bacon wrote "Above all things good policy is to be used so that the treasures and monies in a state be not gathered into a few hands… Money is like fertilizer, not good except it be spread."

The rise of Communism as a political movement has partially been attributed to the distribution of wealth under capitalism in which a few lived in luxury while the masses lived in extreme poverty or deprivation. However, in the Critique of the Gotha Program, Marx and Engels criticized German Social Democrats for placing emphasis on issues of distribution instead of on production and ownership of productive property. While the ideas of Marx have nominally influenced various states in the 20th century, the Marxist notions of socialism and communism remains elusive.

On the other hand, the combination of labor movements, technology, and social liberalism has diminished extreme poverty in the developed world today, though extremes of wealth and poverty continue in the Third World.

In the Outlook on the Global Agenda 2014 from the World Economic Forum the widening income disparities come second as a worldwide risk. According to a 2009 meta-analysis by Paul and Moser, countries with high income inequality and poor unemployment protections experience worse mental health outcomes among the unemployed.