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.
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.