Economics question - Worthless "top 1 % info"

[HoboKnight]

Are Economics science? Anyway, a question. Recently, I've tried to find an info, what exact percentage of world population owns more them 1 mln $. Problem is, all world counters of the type, shove a guy with an income of $32,400 per year together with Jeff Bezos. Top one percent is a meaningless info.

How do I find data, where does 1 million, half a billion, a billon and more begin, globally?

thanks :)

[Lvl 2 Expert]

14 million people, give or take.

Maybe it's your search terms? Asking Google about the number of millionaires works pretty fine.

[Kaptin Keen]

I'm not in economic science - but I think the answer is no.

What I mean by that is .. well, two things:

There are quite many groupings who do research into this sort of thing. Oxfam is one. Arguably, Forbes is another. But they are all political in one way or another, and political research is not for the purposes of finding truth, but for the purpose of proving a point. In other words, they are essentially useless.

The other thing is that this is not a question of what's in someone's bank account. Net worth is complicated. I own an appartment and a car, and I have money in the bank, and some stock, and a pension. I'm easily a millionaire (in DKKR, the only real currency - but it means that I'm good for maybe 250k dollars). My numbers aren't that hard, but still - stock goes up and down, and so does the real estate market.

But someone who owns a company, takes a share of it's profits, has many bits of real estate in many countries, has stock in hundreds of international companies, has money in tax exile - whatever, the list goes on - a person like that is really, really hard to get a proper estimate of. Jeff Bezos is rich, but there will be things we don't know.

Vladimir Putin is rich. He may actually be the richest man in the world - we don't know.

So as far as I know, the answer is no: We cannot get real info on wealth distribution. But we can get the best numbers available, in the political flavor we like best.

[aspi]

The problem you are describing is fairly typical when you're looking at a large data set that is collected from many heterogeneous sources. But you have to understand that the data that you are asking for would be just as "meaningless". Owning a million dollars in New York City is very different from owning the same amount as a resident of Haiti. Those very coarse metrics are never accurate - and you're effectively suggesting to select a different arbitrary point to draw the line, but it is still just as arbitrary.

That being said, you can always look at the source data if you want to do that. The Credit Suisse global wealth report lists open data sources for most countries.

[HoboKnight]

Woah, @Kaptin Keen amazing answer.

[Blackhawk748]

As has been stated, context matters. For instance Bezos is Rich as hell, we all know that, but how much of that immense wealth is liquid assets? I would wager that most of his money is in stocks, property and other hard things that have consequences if he just up and removes them, so there's another layer of complexity to this.

Honestly id be curious to know who had the most liquid wealth on the planet

[Rogar Demonblud]

Probably some drug lord somewhere. They traditionally have a problem laundering it enough to go from cash to property.

[Paula_YY]

You are right, actually, one of my colleagues worked in Russia, and told me, that one of the oil companies in Siberia is somehow connected with Putin in person and everybody knows it, but official beneficiaries are unknown. And even Credit Suisse report can not be used as the ultimate truth unless they described how they calculated statistical error. And all these "average" stats are silly. It's like we it bread, and they eat honey, but statistically, we all eating sandwiches with honey

[Kaptin Keen]

Woah, @Kaptin Keen amazing answer.

Heh - thanks =)

[BeerMug Paladin]

As far as my knowledge goes, all science requires is the ability to formulate theoretical models and then test the usefulness or accuracy of that model with new data that has the potential to invalidate or undermine the model. It doesn't really matter all that much how intricate, complex and chaotic the underlying dynamics really are. So economics is definitely a science, but probably on the 'softer' side of sciences. But like most science, even the people somewhat in the field can make mistakes, or engage in things like p-hacking to arrive at pre-determined conclusions. And to those of us outside the domain, it's quite difficult to tell the difference between the real stuff and chicanery or just honest errors.

However, it's an innately highly politically charged topic. If there are any solid answers or prevailing theories they would suggest how personal and public power is best divided and used. So in some regard, anyone discussing economics as a science is talking about politics. Which probably means that delving too deeply into economics is an inappropriate topic for the forum.

I've seen some rather questionable assertions made under the guise of economics, and when I try to get clarification, usually the person making the argument seems not to understand my question or even really what their own statements mean, so I would wager (as Captain Keen noted) that there's probably a lot of people (okay, probably the vast majority) who reason their ideas about economics backwards, from conclusions back to whatever would need to be true to make those conclusions result. It's definitely easier to argue ideas in this manner if the language you're using isn't well understood by you or your audience to begin with. (Quantum-quantum-quantum!) Which brings me to...

The language of economics, the modeling and the evidence for those models are all statistics. And people are just generally very poor with statistics. Mistakes are trivially easy to make and most people who hear them have almost no idea what they really mean. It's possible for two different people to present the same set of statistics and summarize them to an audience convincingly with contradictory conclusions.

Some of the other sciences (like biology) are subject to similar forces, but it's nowhere near as bad, nor as difficult for lay people to try to understand.

[Telok]

Book: How to Lie With Statistics. https://en.m.wikipedia.org/wiki/How_...ith_Statistics

Written in 1954-ish, really short, has pictures, still in print, generally less than $10 (US). The best basic overview of stats for the non-math people. Covers everything from biased sampling and selective result picking, to how to make misleading graphics.

Reading it will make you a more jaded and cynical person by causing you to ask people "Where did that number come from?" and receiving pretty much the worst possible answers.

[Strigon]

First off, Economics is, technically, a science.
However, as an economics major, I feel obligated to tell you that it's definitely a soft science - and it gets progressively softer as you move from theoretical models into the real world.
Also, what you're asking is actuallly more of a finance question. A closely related field, but not an identical one.

In any case, as others have pointed out, what you're asking is a very arbitrary question. For example, I'm assuming you want to know these numbers in USD? But what about other currencies? You could simply say that anyone whose net worth exceeds $1,000,000 USD is counted, but that's a rather fuzzy measure at the best of times, and only gets fuzzier when dealing with other currencies. Most people's wealth isn't in cash or bank accounts, but in things like cars, real estate, stocks, and other non-liquid goods that don't really have a fixed cost. Certain goods are worth more in some parts of the world, so it's theoretically possible for two people to have the exact same items, drive the exact same car. and live in identical houses, and yet have only one be a millionaire by this metric. Depending on how lax one is with their definitions, and how conservative with value estimations, I could easily see one set of researches differing from another by a factor of 3 or more.

Ultimately, though, that's not a very helpful answer. Fortunately, there are people who have studied this, and have made reports for all to see. Rather than the term "millionaire", which is dependent on currency they opt for the phrase "High-Net-Worth-Individual (HNWI)"
I present to you the World Wealth Report, an annual report made that answers exactly the questions you were asking.
If you want the report itself, it can be found here.
If you're fine with other people paraphrasing, here's the relevant wikipedia article.

[Rakaydos]

Millionare seems to be an arbitrary cutoff point.

{scrubbed}

you're going to need more categories for people 10, 100, 1,000, or 10,000 times richer than "mere" millionares.

[Mr Blobby]

It was touched on above, but I'll go into it in greater detail; the concept of 'asset saleability'. Many folk may scrape into 'millionaire status' merely from the value of property; here in the UK this often is from ownership of a rather modest property within 200 miles of London. Obviously, this is wealth which can't be tapped much [as we need somewhere to live]. A variant of this is seen in the USA with the ageing farmer/rancher who on paper is a millionaire but 90% of that value is their land - and only if it was sub-divided for development.

{scrubbed}

One thing Strigon didn't mention is that some assets are simply hard to value. Yes, the value of stocks rise and fall - but one call to my broker will tell me exactly how much my position is currently worth, I can use it as collateral for a loan and I can sell almost at will. However, the top 15% - 10% often also have considerable assets which are difficult to value and/or sell; such as antiques, art, collectables and stocks in unlisted companies.

With HNWI's, the usual definitions strip out, basically all assets which are illiquid. Meaning that it focuses on the cash and [much more] the items that can be converted to cash at ease. This allows to strip out the 'asset rich, income poor' crowd and focus on the true 1%, who are the primary market for various niche things, like many investments.

The other thing that needs to be considered isn't just raw 'personal net worth' but 'income level' and 'net worth under their control'. It is, for example possible to have a lifestyle of one of the 1%, but your penthouse is held by a family foundation, your income comes from a trust, many of the bills are paid as 'expenses' by an unlisted company and you keep on getting invited to stay at the Hamptons, Bahamas, Aspen etc rent-free.

[Tyndmyr]

Are Economics science? Anyway, a question. Recently, I've tried to find an info, what exact percentage of world population owns more them 1 mln $. Problem is, all world counters of the type, shove a guy with an income of $32,400 per year together with Jeff Bezos. Top one percent is a meaningless info.

How do I find data, where does 1 million, half a billion, a billon and more begin, globally?

thanks :)

Economics is, more properly, when done correctly, math. But mostly, what you're after here is demographics. Basically, read the results of surveys. Fortunately, both "top 1%" and "millionaire" are commonly used demarcation lines, so there is a wealth of available information.

The millionaire club, worldwide, appears to be slightly more exclusive than "top 1%", with roughly .9% of the world being millionaires. In the US, it is approximately 5.6%. So, what the "top 1%" means depends on which top 1% you are talking about. It can be very important to be quite careful with terms to avoid getting nonsense.

What exactly are you attempting to calculate? Are you trying to model something like "Where is the best place to live to be a millionaire?" There's a lot of interesting questions you can ask, but mostly it depends on where you're going as to what might be applicable.

Millionare seems to be an arbitrary cutoff point.

All cutoff points are arbitrary. However, some arbitrary things are useful. If you are selling a product desired by millionaires, or formulating some argument about them, then that cutoff point is useful. What numbers you should use largely depends on what you are trying to measure.

[Kaptin Keen]

Interestingly, where I live around 35% of the population are millionaires - even if that's presumably not in dollars. At the same time, 90% of the population has more debt than savings. And this, of course, is almost entirely to do with real estate. 57% of the population own their own homes (I have literally no idea how that measures up on a global scale).

I'm just going to use myself as an example: I'm buying a house at a price of ~600.000 dollars. My down payment is going to be a third of that, so I'm taking out a mortgage for 400.000 dollars. And my pension and savings and a few other assets should push me into that vaunted top 1%. But I am resoundingly middle class.

So for the purpose of determining who's the richest, most privileged people in the world, a global top 1% isn't worth much of anything (what I mean by that is that the numbers are skewed, because we having this conversation predominantly live in the western world, there quite a large percentage of everyone is in the top 1%, globally). Now, the top 1% of people in Denmark (or the UK, or the US, or Germany, or whatever) is an entirely different sort of thing. The top 1% in Denmark earn 1,4 million (or around 250k dollars) a year and up , which is around 4 times more than I do.

[Mr Blobby]

We also need to remember 'purchasing power parity'; the very fact your $1m can buy less/more in different countries. For example, the OECD guestimates a 'basket of goods' which cost $100 in the USA would be $121 in the UK, $128 in Denmark but only $51 in Poland.

Therefore, if everything else was equal [and excluding property prices] you'd find more '[USD] millionaires' per head in Denmark and the UK than the USA for the mere fact everything costs more and paypackets [usually] are thicker as a result [they don't feel thicker to the one spending it, 'cos of the high prices]. This means folk who'd be regarded merely as 'upper-middle class' locally can be pushed into the 'millionaire' bracket - and vice-versa.

[pendell]

I would argue that economics is not a science in the same way mathematics is not a science. That is , economics is applied math plus statistics. It's a bit different from a hard science is because it's very difficult to make the hypotheses testable at scale; there are simply so many variables that it's difficult to experimentally verify a hypothesis.

Thus, I argue that economics is a branch of applied mathematics , and therefore it is an academically rigorous field of study but not a science in the technical sense.

Of course, I say that about my own major, computer science , as well, despite the name

For that matter, I would argue that almost any field of study that has the word "science" in the word isn't really. A science, that is.

I prefer "arcane technological artes" to "computer science", anyway.

Respectfully,

Brian P.

[Peelee]

The Mod on the Silver Mountain: Please give politics and real-world political figures a wide berth.

[Knaight]

The top 1% info is far from worthless - but if you're expecting a clean and self similar category across 70+ million people you've got questionable expectations. Both wealth and income graphs are roughly exponential (though debt makes the wealth graph weird), which means you get a really pronounced hockey stick effect, which sticks around for a while.

For instance, the mean billionaire has about $4 billion dollars. Given the outliers that are an order of magnitude above that you see pronounced exponential growth even there, for roughly an OoM and a half (depending partially on estimates for organized crime extremes). There's 3 OoMs between a billionaire and a millionaire, same as between a millionaire and a thousandaire.

[Peelee]

The top 1% info is far from worthless - but if you're expecting a clean and self similar category across 70+ million people you've got questionable expectations. Both wealth and income graphs are roughly exponential (though debt makes the wealth graph weird), which means you get a really pronounced hockey stick effect, which sticks around for a while.

For instance, the mean billionaire has about $4 billion dollars. Given the outliers that are an order of magnitude above that you see pronounced exponential growth even there, for roughly an OoM and a half (depending partially on estimates for organized crime extremes). There's 3 OoMs between a billionaire and a millionaire, same as between a millionaire and a thousandaire.

Or put more simply, "the difference between a billionaire and a millionaire is about a billion dollars."

[Xyril]

Interestingly, where I live around 35% of the population are millionaires - even if that's presumably not in dollars. At the same time, 90% of the population has more debt than savings. And this, of course, is almost entirely to do with real estate. 57% of the population own their own homes (I have literally no idea how that measures up on a global scale).

Do they in fact actually count as millionaires then? I don't know how the rules work for Forbes, etc., but in my book "wealth" correlates with some combination of "income" and "assets minus liabilities." Just as an example, taxi medallions (license to let you operate a cab in the city) in New York are ridiculously expensive. (This may have changed in recent years with ridesharing apps taking market share.) Many are owned by bigger operators who purchase multiple medallions and hire multiple drivers, but sometimes it will be a small, independent driver who takes a huge loan. Obviously, the income is enough that--even after loan payments with interest--many people see this is as their best option for making a living. However, I think it would be very misleading to call a cab driver who owes $400k on a half-million dollar medallion a "half-millionaire."

I'm just going to use myself as an example: I'm buying a house at a price of ~600.000 dollars. My down payment is going to be a third of that, so I'm taking out a mortgage for 400.000 dollars. And my pension and savings and a few other assets should push me into that vaunted top 1%. But I am resoundingly middle class.

Again, the top 1% of what? Are you counting the house for 600.000 dollars, or are you counting it as 200.000 worth of equity once you subtract what you owe on the loan? If you're counting assets minus liabilities, it's an imperfect figure. (Obviously, someone who makes minimum wage but lived frugally and saved for years to buy a 500.000 house is less well off than someone who makes 500.000 a year, keeps a year's salary in assets, and spends everything else frivolously knowing that he'll make another 500k next year.) However, it's still a useful figure, so long as you recognize the limitations. It's certainly more useful than "assets ignoring liabilities," which is essentially a listing of who's best at convincing someone to lend them money.

So for the purpose of determining who's the richest, most privileged people in the world, a global top 1% isn't worth much of anything (what I mean by that is that the numbers are skewed, because we having this conversation predominantly live in the western world, there quite a large percentage of everyone is in the top 1%, globally).

You literally just illustrated why that figure isn't in fact worthless: It pretty clearly and convincingly reminds us how privileged we are to live in the developed world. I would never trivialize the suffering of the poorest in our respective countries or argue that we shouldn't work to fix inequality within our borders, but as a matter of perspective it's worth noting that the working poor or the unemployed in a first world country are better off than a large chunk of the world population.

[Kaptin Keen]

Do they in fact actually count as millionaires then? I don't know how the rules work for Forbes, etc., but in my book "wealth" correlates with some combination of "income" and "assets minus liabilities." Just as an example, taxi medallions (license to let you operate a cab in the city) in New York are ridiculously expensive. (This may have changed in recent years with ridesharing apps taking market share.) Many are owned by bigger operators who purchase multiple medallions and hire multiple drivers, but sometimes it will be a small, independent driver who takes a huge loan. Obviously, the income is enough that--even after loan payments with interest--many people see this is as their best option for making a living. However, I think it would be very misleading to call a cab driver who owes $400k on a half-million dollar medallion a "half-millionaire."

Again, the top 1% of what? Are you counting the house for 600.000 dollars, or are you counting it as 200.000 worth of equity once you subtract what you owe on the loan? If you're counting assets minus liabilities, it's an imperfect figure. (Obviously, someone who makes minimum wage but lived frugally and saved for years to buy a 500.000 house is less well off than someone who makes 500.000 a year, keeps a year's salary in assets, and spends everything else frivolously knowing that he'll make another 500k next year.) However, it's still a useful figure, so long as you recognize the limitations. It's certainly more useful than "assets ignoring liabilities," which is essentially a listing of who's best at convincing someone to lend them money.

You literally just illustrated why that figure isn't in fact worthless: It pretty clearly and convincingly reminds us how privileged we are to live in the developed world. I would never trivialize the suffering of the poorest in our respective countries or argue that we shouldn't work to fix inequality within our borders, but as a matter of perspective it's worth noting that the working poor or the unemployed in a first world country are better off than a large chunk of the world population.

{scrubbed}

Yes, they do. Assets-debts is still > 1 mil.
Top 1% of the global average. I am richer than 99% of everyone on the globe.
I never said it was anything but worthless. In fact, I said that it is.

[Xyril]

{scrub the post, scrub the quote}

{scrubbed}

Interestingly, where I live around 35% of the population are millionaires - even if that's presumably not in dollars. At the same time, 90% of the population has more debt than savings.

My initial reaction was that the "35% of the population are millionaires" statement isn't compatible with the "90% of the population has more debt than savings" statement, but I realize now that they can both be true if you if you narrowly define "savings" to include only cash assets.

Yes, they do. Assets-debts is still > 1 mil.

Thank you for the answer. {scrubbed}

If this is true, then your "90% of the population has more debt than savings" assertion is a bit misleading, isn't? I mean, I wouldn't call it a worthless statistic--it certainly provides some insights into the financial habits of people in your country. However, it doesn't really paint the whole picture of their financial health, especially if about a third of those folks have more than a million [currency] in net assets.

I mean, if I had a million dollars in the bank, and zero debt, then I could count myself pretty lucky. However, if I withdrew all of my money except ten or twenty thousand for a rainy day fund, took out a mortgage to buy a house, and used the rest for leveraged investing, then I would technically fall into the 90% with more debt than savings.

But citing that statistic would really paint an inaccurate picture of my financial health. Yes, I wouldn't have enough cash in the bank ready to pay off all my loans at once... but I would still have the same assets minus liabilities wealth because all of debt went directly into financing investments, and unless things went very wrong, all of the real estate and stocks and instruments I borrowed money to purchase would be giving me far greater returns than that money would make sitting in the bank (even after taking account paying interest on my loans.)

I never said it was anything but worthless. In fact, I said that it is.

{scrubbed} I never said you were arguing that the 1% statistic had worth. Quite the opposite--I was refuting your assertion that it was "worthless" by pointing out that in the same post, you (ironically, and probably unintentionally) provided an example of how the global 1% statistic provides a valuable insight. Thus, demonstrating that it's not entirely worthless.

[Kaptin Keen]

If this is true, then your "90% of the population has more debt than savings" assertion is a bit misleading, isn't?

Savings isn't net worth. As such, I have 150k in my savings account, and I have 600k of debt in an appartment worth 2m. So my net worth is a lot larger than my debt, making me a millionaire in DKKR, but not in dollars, and my debt is a lot larger than my savings.

See? =)

[Xyril]

Savings isn't net worth. As such, I have 150k in my savings account, and I have 600k of debt in an appartment worth 2m. So my net worth is a lot larger than my debt, making me a millionaire in DKKR, but not in dollars, and my debt is a lot larger than my savings.

See? =)

You don't need to explain, the concept is easy to understand {scrubbed} if you feel that anything I stated is incorrect, please let me know.

I'm simply pointing out that you're--unintentionally, I'm sure--engaging in the sort of misleading use of statistics that you criticized in your earlier post. Saying "90% of people have more debt than savings" is one of those headline grabbing statistics that makes it sound like your country has a serious problem with their finances, when in fact a closer look would imply that you guys are probably being very smart about using credit. I'm not familiar with how the market and tax structure works in your country, but in the U.S. one of the wisest financial decisions you can make is take on debt at a reasonable interest rate in order to buy a home and stop renting pretty much as soon as possible.

[Devils_Advocate]

First off, Economics is, technically, a science.
However, as an economics major, I feel obligated to tell you that it's definitely a soft science - and it gets progressively softer as you move from theoretical models into the real world.

Spoiler: SMBC

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[Strigon]

Spoiler: SMBC

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Eye of newt and wing of flea,
what is next year's GDP?