I was born and grew up in the states and am living outside the country (near Europe) and the smallest things made me realize how truly rich Americans are compared to the rest of the world, in real terms. Even things like fast food or Walmart are a testament to the abundance the US has (not saying it is right or wrong). And these systems are supported by the simple fact you just have a lot of rich people walking around relative to the global population.
To put it more succinctly, I know engineers/lawyers/doctors in this country I’ve been living in that make 2k a month and it’s good. They work hard, it’s stressful. A fast food worker in the US can make $15/hr and bring in 2.4k a month.
And for that 2k/mo they barely make rent, can't save and are one health issue away from $100k debt. Not really a shining example of either wealth or freedom.
Data from US gov since 2000 show this (BLS, SSA), as do multiple university studies (MN, KY). And the ratio for rural areas is getting worse, more pressure, than urban.
That it varies is not interesting, lots of things have variance. The data shows its generally true.
The US does not lead in broad markers of "social good" like life expectancy, happiness index or social mobility, so what exactly is this KPI useful for?
The issue for Americans is that living a pretty "normal" lifestyle is way more expensive compared to living very similar "normal" lifestyle in most other developed cities.
Easiest example would be groceries. If you live in a crazy expensive place like Manhattan, you could easily spend 4-5x more on groceries compared to a city like Warsaw. But it's not like you are getting better produce or products in Manhattan, you are getting same stuff, just paying way more.
And this is true for other day to day stuff too like Housing, Healthcare, Schools, etc.
Are you also comparing benefits and cost of living? That fast food worker cannot afford an apartment, groceries, or healthcare after taxes. God help them if they have children. Further, what little safety nets that exist in the United States are being gutted by the current administration and the likes of DOGE, which was run by a billionaire who paid a massive sum of money to the current administration to be put in a position to cut government benefits.
Even things like fast food or Walmart are a testament to the abundance the US has
You can get similarly fatty foods in most corners of the world. Doesn't matter if you're deep in central Asia or Africa, any urban settlement will have a restaurant that sells them and most of the roadside stations too.
Supermarkets are pretty American, but that's not true for the same reason it might have been in Yeltsin's day. I think you'd have trouble making a serious argument that communities with Tesco are fundamentally poorer or worse off than those with Walmart.
American megastores with 60,000+ SKUs are just a cultural preference in North America, and not even a universal one at that. Costco is very successful both domestically and internationally by rejecting that model. Trader joes (Aldi) is extremely competitive in the US despite a blatantly European business model. Americans are far more excited for either one of those to move in than a Walmart.
From the Fed's own description of the dataset "The Survey of Consumer Finances (SCF) is normally a triennial cross-sectional survey of U.S. families. The survey data include information on families' balance sheets, pensions, income, and demographic characteristics."
Of course people in US are very wealthy if you are looking at dollar amounts. It would be impossible for cost of living to be this high, without a lot of people having decent amount of wealth.
But people's perception of their own wealth depends way more on relative value of their wealth compared to cost of living. If you live in a city where some shitty 2 bedroom apartments cost 1m$+, you aren't going to feel all that rich even if you have 10 million dollar net worth.
$10M at 10% returns is $1M/yr passive. That'll pay for an expensive apartment before you consider working.
In fact, that's sort of the problem: the massive "rich people get paid for being rich in proportion to how rich they are" cash flows run away exponentially from the "poor people get paid for working" cash flows, inflating the price of any inelastic good beyond their reach. The economy stops being about work and starts being about wealth. Which might be fine if most people were wealthy enough to not work, but that's overwhelmingly not the case so it's overwhelmingly not fine.
No sane person would "feel wealthy" if they are living in a shitty 2 bedroom apartment, even if the place costs 1m$. In places where shitty apartments cost that much, a place that would be considered "luxurious" can easily cost 5m$ or more.
Of course rational thing to do would be to take the money and move to a less expensive city, but with the same logic, anyone who has 1m net-worth could liquidate their assets, move to a different country, retire and live a proper wealthy lifestyle.
But we don't see that happening all that much at all. Mostly what happens is that people are choosing to live middle class lifestyles in most expensive areas that they can afford.
I agree with your point, just not with your numbers.
Even your new numbers: $10M NW, half of it goes to luxury housing, the rest gives you $500k/yr of passive income and that's pretty damn nice by any standard that doesn't involve employing others. I get that this is HN where many of us aspire to such things, but surely that's beyond the point where one should feel wealthy?
The mean and the median wealth differences is the most striking. USA is second on mean wealth and 27th in median (just ahead of Greece). A few trillionaires pulling it up with nothing trickling back down.
Still wealthy either way but I always find it a bit jarring how skewed the US self perception is since people generally experience something closer to the median.
Seems fringe and out of touch with my reality and everyone I know. Does anyone have any info on who the author is and what sorta school of though he's involved with?
The numbers aren't fake but the analysis glosses over a lot.
The author's data says the median net worth for 65–74 year-old households is about $410,000, but 56% of it is home equity. Exclude the house and the median net worth drops to $171,000 and the median financial assets (the part that could actually be converted to cash easily) are only about $115,000. At the 25th percentile, wealth excluding home equity is under $30,000 for every age bracket from 55 up. So basically the net worth number looks best for the people whose wealth is least spendable.
That calls into question the author's claim that "given their current net wealth, a solid majority of Americans can comfortably retire without Social Security." Back of the envelope math: safely drawing 4% on $115,000–$170,000 provides just $5,000–$7,000 a year versus a median SS retirement benefit in the low $20,000s.
For a typical retiree, SS is worth more than every financial asset they own combined. The author says that downsizing or reverse mortgages count as "doing fine" but that's just his opinion. Reverse mortgages are expensive and you lose your equity quickly, and downsizing in the current market basically means that you pay way more for way less.
From what I can tell, it's basically the top third who could do without SS comfortably. Not at all a "solid majority."
> downsizing in the current market basically means that you pay way more for way less
Can you elaborate on that? It's pretty common for people to sell their 4 bedroom family house and retire to Florida. But it's not "way more for way less"
For seniors who sell a house they've owned for years (even decades), they're paying way more for each unit of "house" in this market.
Price per square foot tends to go up the smaller the home and the types of homes older people prefer (single-level, near hospitals, newer/lower maintenance) are in higher demand so they're also harder to find and more expensive.
Transaction costs (agent commissions, closing costs, moving) can be 8-10% of a sale. The capital gains exclusion is only $250,00 for singles and $500,000 for couples, so if you're sitting on big gains, a sale can come with a significant tax bill. In places like California, where assessment caps like Prop 13 keep property taxes low, buying a new home means that you could end up paying more in property tax on a much cheaper home. If you move into a condo, you have to deal with HOA fees. And so on.
Renting isn't always easy either. Senior independent communities can be really expensive (under some models you even have to pay hundreds of thousands of dollars up front) and even if you just rent a regular apartment, you need to compare the rents to drawdowns. $400,000 (the median net worth for 65–74 year-olds) provides $16,000/year at a 4% draw. The median rent for a 1 bedroom apartment in the US is somewhere between $1,200-$1,500.
I do kind of get the point that ensuring Boomers who have a lot of wealth in real estate can pass a paid off house to their heirs isn't a socially valuable goal (especially since Social Security is funded by working people, including many who don't own a house or aren't due to inherit one). Maybe instead SS benefit can be considered more like a loan with the house as collateral, payable on death or transfer.
The article has the author listed at the top. If you click on it, you'll see which university he works for. With his name and university, you can Google to find his wikipedia page.
Of the two-dozen or so technical people whose lives I am familiar with, three are doing well (not at all wealthy, just comfortable). Two got there with good jobs, the third gets everything from wealthy parents. The rest live with parents or in dingy apartments in suburbs, with savings so modest as to possibly not even support that lifestyle in old age. We're all in our late 30's to late 40's. They're all smart and went to good colleges.
The chart there is deceptive—to be fair, we should be showing 1 and 5 percentile as well. Saying “walking around a mall you might encounter a few decamillionaires” is shifting focus from the fact that 1 in 10 people are experiencing near zero net worth and the bottom 1 percentile likely are suffering way more than the top 1 percent are enjoying their riches.
Wow, there's so much wrong with this "statistical analysis" to the point of absurdity. Goes to show that even a 30-year economics professor can be duped by AI.
It looks like his results are taken from the Federal Reserve 2022 Survey of Consumer Sentiments. https://www.federalreserve.gov/econres/scfindex.htm The data is publicly available. I don't think that this was hallucinated.
Can you tell me how the table of numbers was generated? All it says is that it was "calculated" by ChatGPT. This guy is an econ professor; where's his reproducible methodology?
Further, he's treating this 2022 snapshot as a timeseries as if the various categories are tracking the same people over time. Just because 80 year olds in the data are wealthier than the younger brackets doesn't mean that those are the same people (in fact, those 80 year olds are boomers who grew up during a time of unprecedented financial growth and stability in the US, and who currently own a massive amount of housing in the US and are refusing to retire and allow younger people to take their high-paying jobs).
I can continue but those are the most egregious issues to begin with and I'm tired of reading this slop.
I was going to say something similar: invoking one’s credentials as a professor only counts for legitimacy if that 30-year legacy of thinking on the topic is applied to the problem under discussion.
In my opinion, if the analysis is offloaded to the plagiarism machine, it loses all epistemological value.
The numbers are broken, a more accurate measure would have been median rather than average.
People work because they dont have or need more money to survive.
Reality will tell you if people need to work as many hours and as many jobs, they must be struggling. This is also true of many western and other so called rich countries.
Looking at a generation that benefited from both an epic housing price run up and same for stock market and observing that the old people seem to be very rich is A) stating the obvious and B) not a sign of the system being healthy and sustainable
25th percentile never goes above 125k at any age, and 50th percentile doesn't go much about 400k at any age.
Sounds like a lot compared to annual income, but that's trivial if you're trying to retire and live off these assets until you die. Especially since public support, pensions, etc have been eviscerated.
Assuming you can get income of 5%/year from your assets (obviously depends on interest rates, investment mix, etc), 50 percent of people would need to survive on 20k/year or less to retire.
That's not being wealthy. That's choosing between abject piece, and working until you die. Dystopian.
It annoys the heck out of much of the rest of the world but the truth is that Americans are staggeringly wealthy compared to nearly every other place on the planet. The US GDP per capita figures do translate into significant wealth for a large portion of the population.
Most don’t live like it and frankly the ones that show off typically are nowhere are wealthy as they’d like you to believe. Meanwhile the person driving an older model car and mowing their own grass has millions in the bank and doesn’t think twice about it.
Many are simply very wealthy but not materialistic.
Once you realize that 10% of households are getting $200k+/yr of unearned income and 1% of households are getting 1.3M+/yr of unearned income by virtue of owning lots of assets in an economic system geared to pump assets at the expense of literally everything else, it becomes very clear why the social contract experienced by the rest is undergoing rapid deterioration yet still has legions of influential staunch defenders that come out of the woodwork any time someone proposes even modestly pushing back on the worst of it.
Oops, did I say "unearned income"? Forgive me, I meant unrealized gains -- I didn't mean to imply that any taxes were due on those massive passive flows of money. Perish the thought!
All you’ve said is people with assets certainly couldn’t have earned those assets by earning income prior. Shock horror that people follow basic financial principles and decades later they have some wealth.
Quite the opposite. Whatever they did to earn the income with which they originally bought those assets was 100 times more honest than the relentlessly self-serving politics through which they pumped those assets by creating a living hell for their compatriots.
No, the people with assets are the adjudicators. They investigate themselves and find nothing wrong. An honest process with an honest conclusion, if ever I saw one.
There are so many deep flaws with this article that it is difficult to believe it was written by a seasoned economics professor. I can only conclude that he's pushing some sort of agenda or is otherwise politically motivated.
1. The complaints he is mocking ("can't afford a $1,000 repair", "can't afford eggs") are about liquidity and cash flow. He rebuts them with accumulated net worth. Home equity or 401k can't pay for groceries though. Someone can both have decent net worth and have trouble affording basic necessities or paying for emergencies.
2. Households aren't people. The SCF's unit is the family, and the age is set by the reference person. The author says stuff like "Americans at the 75th percentile are millionaires by their mid-50s" describes households that usually contain two adults. Per person, divide that number by two and it becomes a lot less impressive. It also mangles the young end, e.g. a 25-year-old living with their parents aren't their own household.
3. A cross-section isn't a life cycle. He reads a 2022 snapshot as a trajectory ("age a couple decades and you're rarely poor"). But today's 65-69s are special: they caught a four-decade bond bull market, an equity boom, and a housing boom on top of that. Add survivorship: poorer, sicker people die earlier and drop out of the older bins, which mechanically inflates old-age wealth.
4. He concedes half of median wealth is home equity, then waves it away. But if you strip primary residence, the overall SCF median falls from about $192,900 to roughly $57,900. Reverse mortgages ("negative mortgages") have steep fees, low loan-to-value in your 60s, and tiny take-up... and you still have to live somewhere.
Aside from all that, he is also using the data wrong. He had ChatGPT build the table from the raw SCF. I am actually quite familiar with that file. It requires survey weights and five imputation implicates handled correctly. Percentiles in five-year age groups from ~4,600 families carry error bars that are pretty wide! Not to mention 2022 was a peak: median net worth had jumped 37% from 2019, which was the largest on record, and it happened mostly due to house prices skyrocketing. That, in turn, skewed the numbers.
I was born and grew up in the states and am living outside the country (near Europe) and the smallest things made me realize how truly rich Americans are compared to the rest of the world, in real terms. Even things like fast food or Walmart are a testament to the abundance the US has (not saying it is right or wrong). And these systems are supported by the simple fact you just have a lot of rich people walking around relative to the global population.
To put it more succinctly, I know engineers/lawyers/doctors in this country I’ve been living in that make 2k a month and it’s good. They work hard, it’s stressful. A fast food worker in the US can make $15/hr and bring in 2.4k a month.
And for that 2k/mo they barely make rent, can't save and are one health issue away from $100k debt. Not really a shining example of either wealth or freedom.
Housing is expensive in our prestige cities, but that's true in much of the world.
And if you are away from the city, where the rent is less, the incmme is also less. The income:expense ratio is still steep.
That's not really true. Rent to income ratio varies quite a lot
Can you tell me where?
Data from US gov since 2000 show this (BLS, SSA), as do multiple university studies (MN, KY). And the ratio for rural areas is getting worse, more pressure, than urban.
That it varies is not interesting, lots of things have variance. The data shows its generally true.
The US does not lead in broad markers of "social good" like life expectancy, happiness index or social mobility, so what exactly is this KPI useful for?
The issue for Americans is that living a pretty "normal" lifestyle is way more expensive compared to living very similar "normal" lifestyle in most other developed cities.
Easiest example would be groceries. If you live in a crazy expensive place like Manhattan, you could easily spend 4-5x more on groceries compared to a city like Warsaw. But it's not like you are getting better produce or products in Manhattan, you are getting same stuff, just paying way more.
And this is true for other day to day stuff too like Housing, Healthcare, Schools, etc.
Are you also comparing benefits and cost of living? That fast food worker cannot afford an apartment, groceries, or healthcare after taxes. God help them if they have children. Further, what little safety nets that exist in the United States are being gutted by the current administration and the likes of DOGE, which was run by a billionaire who paid a massive sum of money to the current administration to be put in a position to cut government benefits.
Supermarkets are pretty American, but that's not true for the same reason it might have been in Yeltsin's day. I think you'd have trouble making a serious argument that communities with Tesco are fundamentally poorer or worse off than those with Walmart.
American megastores with 60,000+ SKUs are just a cultural preference in North America, and not even a universal one at that. Costco is very successful both domestically and internationally by rejecting that model. Trader joes (Aldi) is extremely competitive in the US despite a blatantly European business model. Americans are far more excited for either one of those to move in than a Walmart.
This whole article is giving off "PragerU"
Is this chart based off personal or household net worth?
From the Fed's own description of the dataset "The Survey of Consumer Finances (SCF) is normally a triennial cross-sectional survey of U.S. families. The survey data include information on families' balance sheets, pensions, income, and demographic characteristics."
Families would suggest household, not personal.
Of course people in US are very wealthy if you are looking at dollar amounts. It would be impossible for cost of living to be this high, without a lot of people having decent amount of wealth.
But people's perception of their own wealth depends way more on relative value of their wealth compared to cost of living. If you live in a city where some shitty 2 bedroom apartments cost 1m$+, you aren't going to feel all that rich even if you have 10 million dollar net worth.
$10M at 10% returns is $1M/yr passive. That'll pay for an expensive apartment before you consider working.
In fact, that's sort of the problem: the massive "rich people get paid for being rich in proportion to how rich they are" cash flows run away exponentially from the "poor people get paid for working" cash flows, inflating the price of any inelastic good beyond their reach. The economy stops being about work and starts being about wealth. Which might be fine if most people were wealthy enough to not work, but that's overwhelmingly not the case so it's overwhelmingly not fine.
No sane person would "feel wealthy" if they are living in a shitty 2 bedroom apartment, even if the place costs 1m$. In places where shitty apartments cost that much, a place that would be considered "luxurious" can easily cost 5m$ or more.
Of course rational thing to do would be to take the money and move to a less expensive city, but with the same logic, anyone who has 1m net-worth could liquidate their assets, move to a different country, retire and live a proper wealthy lifestyle.
But we don't see that happening all that much at all. Mostly what happens is that people are choosing to live middle class lifestyles in most expensive areas that they can afford.
I agree with your point, just not with your numbers.
Even your new numbers: $10M NW, half of it goes to luxury housing, the rest gives you $500k/yr of passive income and that's pretty damn nice by any standard that doesn't involve employing others. I get that this is HN where many of us aspire to such things, but surely that's beyond the point where one should feel wealthy?
Wait, are you accusing the wealthy of being actual humans who value things besides money?
The mean and the median wealth differences is the most striking. USA is second on mean wealth and 27th in median (just ahead of Greece). A few trillionaires pulling it up with nothing trickling back down.
Still wealthy either way but I always find it a bit jarring how skewed the US self perception is since people generally experience something closer to the median.
Note that Caplan is focusing on medians and percentiles in his table, not on means.
> A few trillionaires
There has only been one of those in history, and he is no longer one.
Seems fringe and out of touch with my reality and everyone I know. Does anyone have any info on who the author is and what sorta school of though he's involved with?
The numbers aren't fake but the analysis glosses over a lot.
The author's data says the median net worth for 65–74 year-old households is about $410,000, but 56% of it is home equity. Exclude the house and the median net worth drops to $171,000 and the median financial assets (the part that could actually be converted to cash easily) are only about $115,000. At the 25th percentile, wealth excluding home equity is under $30,000 for every age bracket from 55 up. So basically the net worth number looks best for the people whose wealth is least spendable.
That calls into question the author's claim that "given their current net wealth, a solid majority of Americans can comfortably retire without Social Security." Back of the envelope math: safely drawing 4% on $115,000–$170,000 provides just $5,000–$7,000 a year versus a median SS retirement benefit in the low $20,000s.
For a typical retiree, SS is worth more than every financial asset they own combined. The author says that downsizing or reverse mortgages count as "doing fine" but that's just his opinion. Reverse mortgages are expensive and you lose your equity quickly, and downsizing in the current market basically means that you pay way more for way less.
From what I can tell, it's basically the top third who could do without SS comfortably. Not at all a "solid majority."
> downsizing in the current market basically means that you pay way more for way less
Can you elaborate on that? It's pretty common for people to sell their 4 bedroom family house and retire to Florida. But it's not "way more for way less"
For seniors who sell a house they've owned for years (even decades), they're paying way more for each unit of "house" in this market.
Price per square foot tends to go up the smaller the home and the types of homes older people prefer (single-level, near hospitals, newer/lower maintenance) are in higher demand so they're also harder to find and more expensive.
Transaction costs (agent commissions, closing costs, moving) can be 8-10% of a sale. The capital gains exclusion is only $250,00 for singles and $500,000 for couples, so if you're sitting on big gains, a sale can come with a significant tax bill. In places like California, where assessment caps like Prop 13 keep property taxes low, buying a new home means that you could end up paying more in property tax on a much cheaper home. If you move into a condo, you have to deal with HOA fees. And so on.
Renting isn't always easy either. Senior independent communities can be really expensive (under some models you even have to pay hundreds of thousands of dollars up front) and even if you just rent a regular apartment, you need to compare the rents to drawdowns. $400,000 (the median net worth for 65–74 year-olds) provides $16,000/year at a 4% draw. The median rent for a 1 bedroom apartment in the US is somewhere between $1,200-$1,500.
I do kind of get the point that ensuring Boomers who have a lot of wealth in real estate can pass a paid off house to their heirs isn't a socially valuable goal (especially since Social Security is funded by working people, including many who don't own a house or aren't due to inherit one). Maybe instead SS benefit can be considered more like a loan with the house as collateral, payable on death or transfer.
So I work for 45+ years, paying SS tax for those 45+ years, and what that gets me is a loan when I retire with payback deferred until I die?
You'll have a hard time convincing anyone that they want to participate in that.
The data is from the federal reserve.
> who the author is
The article has the author listed at the top. If you click on it, you'll see which university he works for. With his name and university, you can Google to find his wikipedia page.
https://en.wikipedia.org/wiki/Bryan_Caplan
He is the living, breathing stereotype of what I would expect from an "economics professor for almost 30 years":
"I got in early to the ponzi and life is good can't see what the ungrateful young'uns are whining about!"
Really? Given you're on this site I imagine you know at least some technical people. And for the most part we're all very well off.
Of the two-dozen or so technical people whose lives I am familiar with, three are doing well (not at all wealthy, just comfortable). Two got there with good jobs, the third gets everything from wealthy parents. The rest live with parents or in dingy apartments in suburbs, with savings so modest as to possibly not even support that lifestyle in old age. We're all in our late 30's to late 40's. They're all smart and went to good colleges.
The chart there is deceptive—to be fair, we should be showing 1 and 5 percentile as well. Saying “walking around a mall you might encounter a few decamillionaires” is shifting focus from the fact that 1 in 10 people are experiencing near zero net worth and the bottom 1 percentile likely are suffering way more than the top 1 percent are enjoying their riches.
Wow, there's so much wrong with this "statistical analysis" to the point of absurdity. Goes to show that even a 30-year economics professor can be duped by AI.
It looks like his results are taken from the Federal Reserve 2022 Survey of Consumer Sentiments. https://www.federalreserve.gov/econres/scfindex.htm The data is publicly available. I don't think that this was hallucinated.
Yes, he seems to be using that dataset.
Can you tell me how the table of numbers was generated? All it says is that it was "calculated" by ChatGPT. This guy is an econ professor; where's his reproducible methodology?
Further, he's treating this 2022 snapshot as a timeseries as if the various categories are tracking the same people over time. Just because 80 year olds in the data are wealthier than the younger brackets doesn't mean that those are the same people (in fact, those 80 year olds are boomers who grew up during a time of unprecedented financial growth and stability in the US, and who currently own a massive amount of housing in the US and are refusing to retire and allow younger people to take their high-paying jobs).
I can continue but those are the most egregious issues to begin with and I'm tired of reading this slop.
I was going to say something similar: invoking one’s credentials as a professor only counts for legitimacy if that 30-year legacy of thinking on the topic is applied to the problem under discussion.
In my opinion, if the analysis is offloaded to the plagiarism machine, it loses all epistemological value.
Source: Chat GPTs calculations.
The numbers are broken, a more accurate measure would have been median rather than average.
People work because they dont have or need more money to survive.
Reality will tell you if people need to work as many hours and as many jobs, they must be struggling. This is also true of many western and other so called rich countries.
Looking at a generation that benefited from both an epic housing price run up and same for stock market and observing that the old people seem to be very rich is A) stating the obvious and B) not a sign of the system being healthy and sustainable
25th percentile never goes above 125k at any age, and 50th percentile doesn't go much about 400k at any age.
Sounds like a lot compared to annual income, but that's trivial if you're trying to retire and live off these assets until you die. Especially since public support, pensions, etc have been eviscerated.
Assuming you can get income of 5%/year from your assets (obviously depends on interest rates, investment mix, etc), 50 percent of people would need to survive on 20k/year or less to retire.
That's not being wealthy. That's choosing between abject piece, and working until you die. Dystopian.
It annoys the heck out of much of the rest of the world but the truth is that Americans are staggeringly wealthy compared to nearly every other place on the planet. The US GDP per capita figures do translate into significant wealth for a large portion of the population.
Most don’t live like it and frankly the ones that show off typically are nowhere are wealthy as they’d like you to believe. Meanwhile the person driving an older model car and mowing their own grass has millions in the bank and doesn’t think twice about it.
Many are simply very wealthy but not materialistic.
And based on this comment section we get seriously offended when you point it out.
It annoys the heck out of many Americans as well.
Once you realize that 10% of households are getting $200k+/yr of unearned income and 1% of households are getting 1.3M+/yr of unearned income by virtue of owning lots of assets in an economic system geared to pump assets at the expense of literally everything else, it becomes very clear why the social contract experienced by the rest is undergoing rapid deterioration yet still has legions of influential staunch defenders that come out of the woodwork any time someone proposes even modestly pushing back on the worst of it.
Oops, did I say "unearned income"? Forgive me, I meant unrealized gains -- I didn't mean to imply that any taxes were due on those massive passive flows of money. Perish the thought!
All you’ve said is people with assets certainly couldn’t have earned those assets by earning income prior. Shock horror that people follow basic financial principles and decades later they have some wealth.
Quite the opposite. Whatever they did to earn the income with which they originally bought those assets was 100 times more honest than the relentlessly self-serving politics through which they pumped those assets by creating a living hell for their compatriots.
Because you’re adjudicator on what’s honest and what’s not right?
No, the people with assets are the adjudicators. They investigate themselves and find nothing wrong. An honest process with an honest conclusion, if ever I saw one.
Bad bot.
No, LLMs would be overkill for arguing with you.
There are so many deep flaws with this article that it is difficult to believe it was written by a seasoned economics professor. I can only conclude that he's pushing some sort of agenda or is otherwise politically motivated.
1. The complaints he is mocking ("can't afford a $1,000 repair", "can't afford eggs") are about liquidity and cash flow. He rebuts them with accumulated net worth. Home equity or 401k can't pay for groceries though. Someone can both have decent net worth and have trouble affording basic necessities or paying for emergencies.
2. Households aren't people. The SCF's unit is the family, and the age is set by the reference person. The author says stuff like "Americans at the 75th percentile are millionaires by their mid-50s" describes households that usually contain two adults. Per person, divide that number by two and it becomes a lot less impressive. It also mangles the young end, e.g. a 25-year-old living with their parents aren't their own household.
3. A cross-section isn't a life cycle. He reads a 2022 snapshot as a trajectory ("age a couple decades and you're rarely poor"). But today's 65-69s are special: they caught a four-decade bond bull market, an equity boom, and a housing boom on top of that. Add survivorship: poorer, sicker people die earlier and drop out of the older bins, which mechanically inflates old-age wealth.
4. He concedes half of median wealth is home equity, then waves it away. But if you strip primary residence, the overall SCF median falls from about $192,900 to roughly $57,900. Reverse mortgages ("negative mortgages") have steep fees, low loan-to-value in your 60s, and tiny take-up... and you still have to live somewhere.
Aside from all that, he is also using the data wrong. He had ChatGPT build the table from the raw SCF. I am actually quite familiar with that file. It requires survey weights and five imputation implicates handled correctly. Percentiles in five-year age groups from ~4,600 families carry error bars that are pretty wide! Not to mention 2022 was a peak: median net worth had jumped 37% from 2019, which was the largest on record, and it happened mostly due to house prices skyrocketing. That, in turn, skewed the numbers.
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