What definition of wealth is being used here? If wealth just measures value of assets over debt, then there can be a huge difference in quality of life between two people who both have approximately zero wealth.
My guess is that such a definition is what's being used, and really what's being polled here is understanding of the relationship between income, consumption and wealth (surprising conclusion: most people aren't very good at anything involving math). Of course people in the bottom tiers will have almost no wealth -- they spend their entire income on consumption. People responding to the poll are probably thinking of things more in terms of how resources should be allocated. It would be more interesting to see some measure of consumption among the various tiers.
Quote: “The principal wealth concept used here is marketable wealth (or net worth), which is defined as the current value of all marketable or fungible assets less the current value of debts. Net worth is thus the difference in value between total assets and total liabilities or debt. Total assets are defined as the sum of: (1) the gross value of owner-occupied housing; (2) other real estate owned by the household; (3) cash and demand deposits; (4) time and savings deposits, certificates of deposit, and money market accounts; (5) government bonds, corporate bonds, foreign bonds, and other financial securities; (6) the cash surrender value of life insurance plans; (7) the cash surrender value of pension plans, including IRAs, Keogh, and 401(k) plans; (8) corporate stock and mutual funds; (9) net equity in unincorporated businesses; and (10) equity in trust funds. Total liabilities are the sum of: (1) mortgage debt; (2) consumer debt, including auto loans; and (3) other debt.
This measure reflects wealth as a store of value and therefore a source of potential consumption. I believe that this is the concept that best reflects the level of well-being associated with a family’s holdings. Thus, only assets that can be readily converted to cash (that is, ‘fungible’ ones) are included.”
Please note that this is only the source of the numbers The Atlantic used in their comparison. The Atlantic did the actual poll asking people for how they think the distribution looks.
Thanks. So, it's assets less debt. This is a huge flaw in the study. Even if everyone in the country had exactly the same income and savings rate, you'd still expect a triangle distribution of wealth because of differences in age (graded by years of saving followed by years of retirement on the downward slope). In reality, you have a huge number of people living with a high quality of life with almost no savings (house fully mortgaged, some small equity in their car maybe). Any measurement that counts these people the same as homeless is deeply flawed.
And then we're going to compare that bogus metric with what random people think it might ought to be after a few moments of thought. How many of the respondents do you think asked for a paper and calculator before giving their answer? This whole article is terrible rhetorical slight of hand.
I also use a more restricted concept of wealth, which I call “non-home wealth.” This is
defined as net worth minus net equity in owner-occupied housing (the primary residence only).
Non-home wealth is a more liquid concept than marketable wealth, since one’s home is difficult
to convert into cash in the short term. Moreover, primary homes also serve a consumption
purpose besides acting as a store of value. Non-home wealth thus reflects the resources that may
be immediately available for consumption expenditure or various forms of investments.
My guess is that such a definition is what's being used, and really what's being polled here is understanding of the relationship between income, consumption and wealth (surprising conclusion: most people aren't very good at anything involving math). Of course people in the bottom tiers will have almost no wealth -- they spend their entire income on consumption. People responding to the poll are probably thinking of things more in terms of how resources should be allocated. It would be more interesting to see some measure of consumption among the various tiers.