Monday, July 21, 2014

New Research: One Percent of Richest Americans Controls One Third of Wealth

America's rich are even more well off that we originally thought, a new study has found.
 
The top 1 percent of U.S. earners were previously estimated to control 30 per cent of the country's wealth but it seems that number could be closer to 37 per cent.
A new working paper from European Central Bank senior economist Philip Vermeulen claims 30 percent is a lowball estimate of the net worth of the nation's elite because wealthier households are less likely to respond to surveys about their assets than lower-income families.
  • The top 1 percent of U.S. earners were previously estimated to control 30 per cent of the country's wealth but it seems that number could be closer to 37 per cent
  • A new working paper from a European Central Bank senior economist wealthier households are less likely to respond to surveys about their assets than lower-income families
  • This is because they are away, too busy or hesitant to answer questions honestly about their wealth
  •  
    Vermeulen analyzed data from Forbes' billionaires lists to estimate the share of the 1 percent is in fact between 35 percent and 37 percent.
     
    'Our knowledge of the wealth distribution is less than perfect,' Vermeulen writes in the paper. 
    'Our results clearly indicate that survey wealthy estimates are very likely to underestimate wealth at the top.'
    The Survey of Consumer finances is the best source of information on wealth distribution, asking questions about all asset holdings and debts of the household.
    However, a large chunk of the wealthy sample families don't respond, or only respond in part, because they're away, too busy, or they refuse to reveal sensitive information for example.
    Vermeulen found that using the Forbe's billionaires list gave him a better idea of the jaw-dropping wealth in each country, and in turn account for that missing data.
     
    He said getting the wealth break down of the U.S. correct helps both economic researchers and policy makers as it guides fiscal policy.
     
    The paper found the U.S. was not alone in underestimating how rich its rich are.
     
    Other countries also downplayed the assets of their 1 percent, with many European nations having a significant gap between the richest household recorded by their equivalent survey and the poorest billionaire on the Forbes list.
    Vermeulen 's research may also suggest that the wealth controlled by the richest 5 percent in America, which was always thought to be a huge 60 percent, may also be more.
    The men and women on the Forbes' billionaires list have an aggregate wealth of $6.7 trillion.
     
    DailyMail
     
     

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