

Rising Wealth Inequality: Should We Care? - edwardshui
http://www.nytimes.com/roomfordebate/2011/03/21/rising-wealth-inequality-should-we-care/living-beyond-your-means-when-youre-not-rich

======
yummyfajitas
The most interesting data cited (in this essay:
[http://www.nytimes.com/roomfordebate/2011/03/21/rising-
wealt...](http://www.nytimes.com/roomfordebate/2011/03/21/rising-wealth-
inequality-should-we-care/most-americans-by-midlife-feel-rich-enough) ) is
this report:

[http://www.pewtrusts.org/our_work_report_detail.aspx?id=5896...](http://www.pewtrusts.org/our_work_report_detail.aspx?id=58965)

(Previous HN discussion here: <http://news.ycombinator.com/item?id=2355141> )

This says that incomes have risen by at least 60% ( _relative to parental
income at same age_ , inflation and family size adjusted) for all categories
of Americans. The bottom 10% gained 61%, the top 10% gained 92%. Our increase
in inequality is the result of a rising tide lifting all boats.

Another interesting implication of this: the alleged CPI-adjusted
decline/stagnation in median wages must be primarily caused by immigration. If
Americans are richer than their (American) parents, but incomes are down, then
the decline/stagnation must be concentrated among people who don't have
American parents.

[edit: added italics to parenthetical in 4'th line in response to locopati's
comment. Also added link to essay citing this report.]

~~~
jbooth
I don't see how we get to "decline/stagnation in median wages must be
primarily caused by immigration". You're only referring to income compared to
parents at the same age.

If I call home to the suburbs, I can find a whole bunch of 35-55 year old
white people named "murph" and "sully" who exceeded their parents' incomes at
25 on a generation-over-generation basis but have been personally
stagnant/declining in income for the last 10 years. Furthermore, I can find
another group of 25 year olds who are very much _not_ making what people used
to make in non-knowledge-worker jobs a few decades ago. The average might say
otherwise but the average includes me. I didn't stay home.

That's the story of the last 30 years for many Americans who aren't high end
knowledge workers, and there's a lot more of them than there are recent
immigrants.

~~~
yummyfajitas
_You're only referring to income compared to parents at the same age._

And this a weighted average of incomes roughly 27 years ago (the weight is the
distribution of ages at which children are born).

The sample of people today includes only those people who's parents were in
the united states 27 or so years ago. Call this group A. Call the complement
(either immigrants or children of immigrants) B. Call the historical reference
group C. Wages of A U B are roughly equal to those of C. Wages(A) > C. This
implies wages(B) < C. If wages of A U B have not increased, but the wages of A
have, this implies the wages of B must be lower than the historical average.
Simple arithmetic.

So basically, the story is that Murph Jr. makes 60% more (Chained CPI
adjusted) than Murph Sr. did at the same age. But the average of Murph Jr. and
Jose (a recent immigrant) is lower than Murph Sr.'s (Chained CPI adjusted)
wage.

Also, while Sully Jr. might make less than Sully Sr. did, the study asserts
that the average of Sully Jr. and Sally Jr. (not to mention Tyrone Jr. and
Poonam Jr. - remember how non-white males are also allowed to have good jobs
these days) is up 60%.

~~~
Duff
Murph Jr. really doesn't make more money, as other costs have skyrocketed
since that time.

The early 80's were the tail end of the era where a single income could
purchase an average home. So while my income is about 50% higher than my
father's at the same point in his career, I'm able to live in a similar type
of home and have a similar lifestyle, although I'm in a small city where costs
are far lower.

If I lived in the same neighborhood where I grew up in NYC, we would only own
a home if we were renting the downstairs.

------
geebee
I found this "room for debate" to be a disappointment. The nytimes wrote an
earlier article titled "how we value the super rich" that I thought was far
more insightful. This article indicated that Americans distinguish between
super-rich who create wealth, and super-rich who are essentially toll
collectors. It appears that conventional wisdom does an ok job at this - tech
entrepreneurs, for instance, are generally admired, whereas wall street is
generally despised, especially these days. There is some merit to this:
[http://www.newyorker.com/reporting/2010/11/29/101129fa_fact_...](http://www.newyorker.com/reporting/2010/11/29/101129fa_fact_cassidy)

Unfortunately, there is nuance, and I don't think there is really any
possibility that the public will fully grasp it. Not because they're dumb, but
because it takes a huge amount of time to figure it out. Even that new yorker
article, which takes a severely dim view of wall street, absolutely
acknowledges that banking fulfills a critical role in the creation of wealth.
How do you make sure you keep the baby when you throw out the bath water? And
we're all too familiar with "innovative technology development" companies that
really just exist to patent stuff, in order to extract a toll from those who
do create (often completely independently of the original "innovation").

As for what to do? I don't even have a good answer in theory. I browse the
randian/libertarian literature at top dog in berkeley every now and then, and
there is a compelling case that many rent-collecting segments of the economy
are propped up by government regulation, though even then, what do you do,
eliminate the patent system? go back on the gold standard? abolish the AMA?
Some people would say yes, I'm not so sure. I wonder if just a more vigilant
attempt on the part of government to identify and eliminate rent-collection
would help... I know, I know, a lot of people would hear this and say "in your
dreams", and as usual, I'm really unsure about this myself.

~~~
olalonde
A moderate libertarian? Wow, that's refreshing :)

More seriously, I think there is a strong case for seriously limiting if not
completely eliminating government intervention in the economy as those
interventions often lead to very unintended consequences, notably favoring
special interest groups at the expense of others.

As Milton Friedman said: "One of the great mistakes is to judge policies and
programs by their intentions rather than their results."

Regarding income inequality, I do think it is a worrying phenomenon but a very
small price to pay for a healthy economy and most of all, individual liberty.

~~~
edwardshui
Although I am not an American (i.e. I don't know the entire scenario in
absolute certainty, but I work here in US), I totally agree that the
government shouldn't intervene, at least not at the expense of tax payers.

I am totally baffled by the ever growing inequality between the rich and poor
(pay, taxation, power differences, and etc). I was always wondering when we
could ever see a significant change in such absolute unfair situation. Can we
possibly use technology to make a change?

Hoping to see a better outcome by the time my children grow up, or before I
die!

------
anamax
[http://taxprof.typepad.com/taxprof_blog/2011/03/tax-
foundati...](http://taxprof.typepad.com/taxprof_blog/2011/03/tax-
foundation.html)

Summary - while the upper 10% of Americans have a greater share of the
national income than in many other countries, they also pay a significantly
larger share of the income and payroll taxes. (Yes, that includes SS.)

Method - find share of income. Find share of taxes. Divide latter by former.
In all but a few countries, that ratio is >1\. The US ratio is 1.35, the
highest. Next comes Australia, at 1.29, the Netherlands at 1.28, and Ireland
at 1.26. No other country's ratio is over 1.2.

Sweden's ratio is 1 while Norway's ratio is 0.95. Yes, you read that correctly
- their income/payroll taxes are NOT progressive wrt the top 10%.

Me - I don't care what someone else has, aka envy. I care what I have, aka
greed.

~~~
cantastoria
I agree with your analysis but I think you missed the fact that al ot of other
countries tax spending through VAT rather than income. I'm not saying this is
a better system (I don't think it is...). For instance, the standard VAT in
Norway is 25% (14% for food and drink) so the slack is being taken up (in a
big way) somewhere else.

I also don't care if there is a large income disparity. All the remedies I've
seen proposed to fix this "problem" essentially just raise taxes on top
earners. I can't think of a worse place for that money than in the hands of a
politician.

~~~
anamax
> I agree with your analysis but I think you missed the fact that al ot of
> other countries tax spending through VAT rather than income.

Sales taxes and VAT makes the US even more progressive in comparison because
the rich spend a smaller fraction of their income on VAT-taxed things.

For example, Bill Gates spends maybe 5x as much as me on dinner yet we both
pay the same tax rate on said dinner. His "dinner budget" is in the noise in
his budget. Mine isn't.

Luxury item taxes are in the noise for him so the fact that I don't pay them
doesn't make a significant difference wrt progressiveness.

------
ctdonath
The article is a great example of gross innumeracy. The author confuses linear
distributions with exponential ones, comparing them as stacked bar graphs
without suitable differentiation of axis.

Doesn't take much of a consistent percentage increase in income from one
person to the next, spread across a large population, to result in that top
20% indeed dominating most wealth.

ETA (after playing with Excel for a few minutes): If each person in the USA
makes just 0.000003% more than the next, the resulting "20%s" wealth
distribution graph looks exactly like the "Actual" part of the Percent Wealth
Owned graph.

I'd say a wealth inequality of three millionths of one percent between one
person and the next is about as fair a wealth distribution as you could ask
for. The author needs to educate himself about statistics before self-
righteously educating others about the virtues of communism.

ETA2: reduce the differential to 0.000002% and the graph approximates the
"Estimated" part of the graph in question. To achieve the alleged "Ideal"
distribution, further reduce the differential to 0.000001%. Innumeracy indeed.

~~~
rwl
> ETA (after playing with Excel for a few minutes): If each person in the USA
> makes just 0.000003% more than the next, the resulting "20%s" wealth
> distribution graph looks exactly like the "Actual" part of the Percent
> Wealth Owned graph.

Not sure what you're saying here. Do you mean that, in an imaginary country
where everyone but the top earner makes exactly 0.000003% less than the person
above him, income will be distributed in that way?

I see how this would tell against the author's particular choice of
representation, but I'm not sure that it tells us much about how income is
actually distributed in the U.S., much less how it _should_ be distributed.
Just because the same distribution can be realized in a country where income
seems to slide much more "fairly" (i.e., gradually) from the richest to the
poorest doesn't mean that distribution can't be realized in a much less fair
way here. (Moreover, I suspect that if you put it in absolute dollars, rather
than percentage points, the incomes in your imaginary country would strike
most people as decidedly less fair.)

~~~
ctdonath
Yes, I do mean that. I ran the numbers & graphs in a few minutes on Excel and
came up with results that matched the article's graphs (right down to the
automatic color choices - heh). I also mean that the real-world actual,
estimated, and (alleged) ideal distributions are a near-perfect match for the
mathematical theory. Ergo, it gives lie the selfish "should" part: we are
living the reality of statistics, to wit a near-zero differential of income
between one person and the next necessitates a huge fluctuation between the
bottom & top wealth holdings.

The "innumeracy" comment comes from the fact that those decrying "unfair!" do
not realize that a miniscule (two millionths of one percent is nigh unto zero)
linear adjustment of percentages translates to exponential variations when
applied across hundreds of millions of people. They're performing an equal
linear division of the population (20% increments) and somehow expecting the
wealth numbers to come out with a similar "fair" equal division of holdings;
realizing that the rich should indeed have more than the poor (hence the
semantic difference in terms), they resolve this cognitive dissonance by
"allowing" the rich to hold some 3x the wealth of the poor - oblivious to the
statistical fact that variations in wealth are a matter of exponential-
accumulation percentages, not linear accumulations multipliers.

I don't see how income can slide much more "fairly" (i.e., gradually) from the
richest to the poorest than a differential of a vanishingly small three
millionths of one percent. To say that somehow it "should" (obvious moral
arguments of "it's not yours to distribute" aside) be _one_ millionth of one
percent instead is to wage class warfare, a very real and bloody process as
history shows, because the dividing lines for the 20% groupings mean the guy
at the bottom of the highest bracket is making $0.10 more than the guy at the
top of the second-highest bracket, and the guy at the bottom of the second-
lowest bracket is making $0.0003 more than the top person in the lowest
bracket. Comparing between adjacent individuals, and even across entire
brackets, with real numbers should strike most as decidedly fair. Is the 80%
division hundreds of times wealthier than the 20% division? and the very top
unto billions more than the very bottom? sure - and that's reality, folks: the
wealth distribution curve is a natural consequence of miniscule percentages
aggregated over hundreds of millions of people, and no amount of "should" and
social-reengineering (to wit: "comply or die") can render viable change to a
natural, social, statistical phenomenon.

But since many people cannot cope with exponential consequences of uniform
miniscule percentages applied across a population of hundreds of millions, we
will always be faced with those who cry "unfair!" and insist on forcing their
notion of "fair" upon the population. The 20th Century suffered some
100,000,000 dead as a consequence, and the authors of TFA (and, it seems, you
(rwl)) want to repeat that toll for want of the 0.000003% more their neighbor
makes, when 0.000001% would somehow be OK.

~~~
rwl
Sorry, I still don't get it. Let's put the empirical question aside, and
suppose that in fact, if you lined up every American in order of income, the
difference between any given person's income and that of the person on his
left or right would be no more than 0.000003%.

What does that show? Well, it shows exactly what you say: that income in
absolute dollars would grow exponentially from one end of the line to the
other. I'm not sure what comfort this is supposed to be. Can you say to the
guy at the bottom that, just because there's no place on the line where
incomes take a big leap (percentage-wise), he should be content to live in a
society that's structured this way? that he is unjustified in thinking the
global pattern is wrong, because there's no obvious local point where it goes
wrong?

I agree that it sounds ludicrous to say a 0.000003% differential is unfair,
while a 0.000001% differential would be okay. But it isn't clear that the
issue should be framed in terms of a _percentage_ differential at all. You say
that this is a "natural, social, statistical" phenomenon -- but why is it more
"natural" that wealth should grow exponentially from one end of the line to
the other, rather than (say) linearly? (And why should we expect that making
society more fair will consist in adjusting a uniform percentage differential
in wealth, as opposed to, say, the normal non-uniform means of redistribution
we use now, like progressive taxation?)

Moreover, if exponential growth from poorest to richest really _is_ the
natural structure of income in modern society, then the question of whether a
0.000003% or 0.000001% differential makes for the best society becomes quite
important, for exactly the reasons you point out: such a tiny difference in
percentage has enormous consequences when iterated over hundreds of millions
of people. And surely, in doing our moral reasoning and in making policy,
those global consequences should count for something. We need not be consigned
to incredulity that such an apparently tiny difference could matter.

~~~
ctdonath
"I agree that it sounds ludicrous to say a 0.000003% differential is unfair,
while a 0.000001% differential would be okay."

Good. It is. Even when taking into account my own innumeracy and screwing up
the calculations so the difference is in fact between 0.000003% vs.
0.0000003%.

It is clear indeed that the issue should be framed in terms of a percentage
differential. $100 is a big deal to the guy who sweeps your office, but not so
much to the guy who owns it. When asking for a raise, the dollar amount you
seek is based on a percentage of your income, not the amount independent of
your income: you ask for a $1000 or $10,000 raise, not a $100 one. It makes
sense because when you _are_ dealing with large orders of magnitude, you don't
maintain the notion that values significant to small orders of magnitude are
still relevant (you may waffle over the price of a single doorknob for your
home, but not for your office building). I'm not sure how to present a
persuasive argument that what is, is. If you're dealing with millions/billions
of dollars, a hundred dollars isn't a concern - but if you're scraping by in
poverty, it is. Maybe the best argument is that when I plugged in 0.0000003%,
0.0000017% and 0.0000033% as applied exponentially over a large population
into Excel (to wit: applied percentages .01%, .05%, and .10% to a population
of 100, then scaled to the US population), the resulting graph looked
_exactly_ like the one in the article (save for perhaps some slight real-world
distortions). The theory, with little effort, matches the reality.

Sure, the question of whether a 0.000003% or 0.0000003% differential makes for
the best society becomes quite important, for exactly the reasons you agree
to: such a tiny difference in percentage has enormous consequences when
iterated over hundreds of millions of people. My concern is what you
overlooked in my post: a century of trying to adjust that natural reality
resulted in some 100,000,000 deaths under Communism.

------
jbooth
Well, so aside from the revisionist statistic-slicing, it's pretty clear that
income inequality has skyrocketed, income mobility has decreased and we've
been reducing taxes disproportionately on the rich for the last 30 years. For
exhibit A), we can examine the present job prospects of a computer programmer
vs your typical laborer or service employee.

Fairness aside, this is an issue for the rich as well. How you gonna stay rich
if the middle class doesn't have disposable income to spend? It seems like a
lack of middle class jobs/income would hurt the future value of any
investments.

That's the thing I really don't understand about the "I got mine, you can go
screw" attitude towards income inequality / income mobility. It hurts you,
too, and you have more to lose.

~~~
yummyfajitas
Could you define middle class, just so we know what you are talking about? I'm
not particularly worried about a lack of middle class jobs if the primary
cause is merely inflation of the definition of "middle class".

Also, I'd be curious to see stats on time variation on income mobility.

~~~
jbooth
The middle 50% or so of the income scale, whatever that happens to be? Pulling
that out of my hat.

The study you linked upthread said a bunch about income mobility or lack
thereof. I see that as a much bigger problem than equality for it's own sake,
although I'd be very concerned about a completely hollowed out system.

~~~
yummyfajitas
With that definition, there can never be a "lack of middle class jobs" (to
borrow your phrasing). Precisely 50% of the country will be middle class at
all times.

~~~
jbooth
Yeah but there can be a transition of those jobs from "paying a wage you can
support a family on" to "not doing that". That seems to be what's happened,
we've replaced a lot of trade skill jobs in manufacturing, etc, with non-skill
jobs at Walmart or the gas station.

------
dstnbrkr
The United States is definitely an outlier compared to it's industrialized
peers in terms of inequality: [https://www.cia.gov/library/publications/the-
world-factbook/...](https://www.cia.gov/library/publications/the-world-
factbook/rankorder/2172rank.html)

------
VladRussian
what would you expect when you decrease taxes for the top and increase taxes
for everybody?

The total tax burden is equal to government spending [minus any income from
government owned productive enterprises]. That total tax burden is financed
either through explicitly collected tax or through deficit. During recent
decades, the skyrocketing government spending and decreased tax rates mainly
for the top, caused skyrocketed deficit spending - the skyrocketing of the tax
paid by everybody.

To illustrate, imagine the situation with 0% tax rates and the government
financed by printing amount of money equal to 50% of GDP - that will make
effective tax rate 33% as 100 dollars of produced goods and services will be
presented with 150 dollars of money. So people who made 100 dollars will be
able to buy only 66 dollars worth of goods and services - thus effectively
have their 33% collected and spent by the government even with 0% explicit tax
rate.

edit: please don't mistake described process for inflation which itself is
another tax [in addition to described above] collected next year and the year
after that and so on... on the earnings of this year.

The deficit tax can be thought of as a dilution in case when government would
additionally issue itself a chunk of stock in your company in exchange for
some "protection" to you.

~~~
VladRussian
replying to myself as the parent post was already upvoted and this one may
sound politically charged.

The reason for economical problems under Republicans is that business, and
thus economy, doesn't do well when total tax burden is increased. The
Republicans when in power, especially in 198x and 2001-2008, while decreasing
nominal tax rates in some cases, have significantly increased the total tax
burden.

------
Symmetry
I'm really not at all concerned about wealth inequality except to the extent
that it causes consumption inequality.

Imagine a perfect world where everybody makes the same wages and invests those
wages prudently. They're born, go into debt a little to pay for college, make
money and save it, then eventually retire on their savings. In this world
where everybody's lives are the same there would still be huge inequalities in
wealth between people just starting out and people about to retire.

~~~
hackinthebochs
The difference there is that in your scenario income inequality would appear
"fair" to most people. The problem with what we see around us is that it
appears very unfair. This is where the real problem is.

Some people might want to dismiss the idea that things should be or seem fair,
but this ignores the fact that fairness is a very important attribute of
economic stability. The more unfair the system seems the more unstable it will
be in the long term. Social unrest is detrimental to an economy.

~~~
Symmetry
I'm not sure what you're saying here. The point of the scenario is that you
can have large differences in wealth while everybody has the exact same
income. Certainly I wouldn't say that we shouldn't worry about matters of
fairness.

I'm guessing that you think that I think that the scenario I gave says
something about whether our society is fair or not. I don't think that.
Instead what I think, and what I was trying to show, is that if you're
concerned about fairness looking at wealth inequality is almost entirely
useless when we could be looking at income or consumption inequality - because
its very easy to have a society with large amounts of wealth inequality even
if almost everybody would agree that it was fair.

~~~
hackinthebochs
Gotcha. Yeah I thought your point was that the current wealth inequality is OK
because here's an example of a society with large wealth inequality that we
would all agree is also OK.

I think when people mention wealth inequality they're understanding it in
their minds as income inequality; I generally do.

~~~
Symmetry
I expect they do and I expect that the people in the survey who were asked
what they thought the distribution of wealth in the US was gave something that
approximated what they thought the distribution of income was. The fact that
the two are easy to confuse is what made the article actively bad, rather than
merely pointless.

------
delackner
Rising wealth inequality is not in itself a bad thing, but the many hundred-
fold increases in executive compensation over the past 20 years have nothing
to do with results, performance, profits, etc. They are the result of a broken
system of corporate governance that puts the interests of executives and the
interests of shareholders at odds.

~~~
yummyfajitas
So what is the cause of the hundred-fold increases in compensation for
athletes and musicians?

~~~
cyrus_
An athlete's or musician's salary is linked to their performance on the
playing field or in the market. The people writing their paychecks are not
themselves musicians or athletes. Executives, on the other hand, often make
huge amounts of money even if their company is tanking. The people writing
their checks -- members of the board -- are themselves executives. Perhaps
they are subconsciously conspiring to keep prices high for their services?

It doesn't have to be this way. Germany requires that the board includes
employees. Japan has also succeeded, perhaps by applying social pressure, in
keeping executive salaries reasonable in most cases.

~~~
yummyfajitas
CEO pay is usually linked to performance as well. Most are paid primarily in
stock options or performance linked bonuses.

Unless you want to claim that Lady Gaga's performance is superior to that of
Johnny Cash, I don't think you can explain the increase in musician pay by
performance increases.

~~~
cyrus_
Its not about who is a better musician, its about who can sell more albums,
concert tickets, etc. In that respect, Lady Gaga knows how to work pop culture
like few others.

------
rick888
In a free society, you will always have wealth Inequality. Some people make
poor life choices (having kids too early, drugs, crime, etc), some people
choose not to get educated, and others decide to sacrifice their time and be
successful.

The answer isn't to take away from the rich and give to the poor. This will
just create a class of people that rely on the government for handouts.

We should be educating the poor on poor life decisions. If they still don't
listen, there isn't much we can do.

~~~
AlexandrB
I get this argument. It has strong intuitive and emotional appeal. The problem
is that it ignores all the environmental factors that make poor life choices
particularly punishing for the poor.

Certainly, there are some individuals that can overcome hardships while coming
from any background - but these are rare. The more typical case is someone who
will make some good choices and some bad choices. If that individual comes
from a well-off background, the poor choices (e.g. kids early) can be papered
over while the good choices can be better leveraged through access to more
opportunities.

For someone from a less well-off background each mistake can be very costly.
Have kids too early and you are unlikely to be able to support the kids while
working and paying for college. Opportunities are harder to seize as well -
living paycheque to paycheque would make it hard to pick up and move to SF to
found a startup for example.

I'm not saying it's impossible to escape poverty without help - as I said, a
dedicated individual can most certainly do it. From a statistical point of
view, however, poverty will beget more poverty because the average poor person
will not have enough second chances to make it out. If we want society to
improve, we MUST provide a way for the average poor person to get past some of
their mistakes. Yes, it looks like undeserved handouts, but I think it's the
right thing to do.

P.S. Don't get me started on education. This is the single best thing we can
do to help kids escape their background and we continuously underfund and
mismanage it. It's fucking criminal.

~~~
ams6110
I would agree that we mismanage education, but not that we underfund it. We
spend more per student on public education than we ever have
(<http://nces.ed.gov/fastfacts/display.asp?id=66>).

~~~
AlexandrB
Fair enough. I guess I don't know enough about the overall funding picture.

What gives me the impression of underfunding though is that education spending
is one of the first things to get cut when there is fiscal crunch. I think
this is ass-backwards and a result of optimizing for the short term and
ignoring the long-term consequences.

Still if the spending is at record levels...

~~~
yummyfajitas
Local governments cut education spending first because it is the single
biggest category of spending. Added up over the nation, police, fire, prisons,
roads and mass transit cost less than half of what education does (at the
local level).

<http://www.usgovernmentspending.com/piechart_2009_US_total>

------
Duff
I don't think this matters, as most of this wealth is on paper and is thus
ephemeral.

The inconvenient truth is that our levels of spending and accumulation is debt
is not sustainable, period. That leaves two choices:

1\. Dramatically cut entitlement and military spending, which requires that
Congress vote for gutting many programs.

2\. Continue borrowing and servicing debt by having the Federal Reserve
continue printing money. This indirectly cuts entitlement spending by
devaluing the benefits and doesn't make elected officials accountable.

So if you're worth hundreds of millions, and that worth isn't in the form of
assets with intrinsic value, you may not be worth anything after all. The rest
of us, on the other hand are debtors.

------
olalonde
> even more equitable distribution

I think the author really means _equalitarian_ distribution.

------
jcampbell1
If every single american made exactly $50k/year, then the bottom 50% would
have zero percent of the wealth (spend everything they make), and the top 10%
would consist of frugal people, who save 60% of their income every year and
have 70% of the total wealth. In this world where everyone has exactly the
same income, there would still be a wealth disparity far more than the
estimate and ideal cases. The chart proves that people are bad estimators, and
has no basis in actual human behavior.

