Hacker News Board Hacker News, browsed like a classic message board
Live data from Hacker News

Wealth Levels, Wealth Inequality, and the Great Recession [pdf]

web.stanford.edu

Post reply on HN
Print view View original

31–40 of 58 posts

Re: Wealth Levels, Wealth Inequality, and the Great Recession [pdf]

#31

Post by TaylorAlexander »

alexeisadeski3 wrote: post #19
mattm wrote: post #7

It's depressing how 1/4 households basically have no wealth at all.

If you take a minute to consider the demographics involved and the nature of wealth, it is neither depressing nor surprising nor even "bad". Consider, for example, that many people have negative wealth.

Consider what factors, and in what way?

Also, whether or not something is depressing, surprising, or bad is entirely subjective. Something you do not consider surprising may in fact be surprising to another individual, so without knowing them it's sort of silly to say "it isn't surprising". If they say it is surprising, it means to them it was. If you do not think others should be surprised, it may be useful for you to explain what knowledge you have that prevented your being surprised.

Re: Wealth Levels, Wealth Inequality, and the Great Recession [pdf]

#32

Post by alexeisadeski3 »

Paul_Dessert wrote: post #21
alexeisadeski3 wrote: post #13

Earlier quoted context omitted.

Converting home equity to consumption is my guess. Remember HELOCs?

HELOCs are back and bigger than ever! Home-equity lending surpassed 2009 levels in 2013, with $111 billion in new home equity lines of credit (HELOCs) opened. In the fourth quarter, new lending increased 43% from quarter four 2012, according to data from Experian-Oliver Wyman Market Intelligence Reports and Experian’s IntelliView tool. http://www.marketwatch.com/story/helocs-made-a-comeback-in-2...

Haha awesome.

Though I imagine that surpassing "2009 levels" is not very exciting. Wake me up when they surpass 2005 levels!

Re: Wealth Levels, Wealth Inequality, and the Great Recession [pdf]

#33

Post by jacobolus »

nickff wrote: post #27
jacobolus wrote: post #17

Earlier quoted context omitted.

Your chart shows income distribution, while the linked study is talking about net worth.

You are correct about the chart, but if you look at the second and third blog-posts, you will see how family structure has changed, and how it will have a similar impact on measured household wealth. I wish that I had a similar wealth distributions graph handy, but this was the best source I could remember, and I think it serves to adequately demonstrate the point.

It’s a fair critique, but it really doesn’t come close to explaining the 2003–2013 data.

The ratio of 95th percentile household net worth to median household net worth doubled from ~9x to ~18x. That’s not just some artifact of changing family structures. That’s a massive increase in wealth inequality.

Basically, your point is interesting, but in context it’s mostly a distraction. (But I agree that a chart showing individual rather than household wealth would be nice to see.)

Re: Wealth Levels, Wealth Inequality, and the Great Recession [pdf]

#34

Post by jahewson »

thrownaway2424 wrote: post #20
Retric wrote: post #16

Earlier quoted context omitted.

Supporting 1 person on x income is harder than supporting two people on 2x income. Put simply, a couple does not need two stoves, and any shared trip is less expencive etc. There are a few edge cases at the individual level for things like end of life care and taxes, but the overall economic bennifits are huge.

On the other hand, 1 person with x income pays less income tax than 2 people with 2x income.

The US has joint filing for married couples so that's not the case, whereas it would be in e.g. the UK.

Re: Wealth Levels, Wealth Inequality, and the Great Recession [pdf]

#35

Post by alexeisadeski3 »

Daishiman wrote: post #18
breischl wrote: post #9

Earlier quoted context omitted.

But the number of households is strongly influenced by people's personal social decisions such as divorce or living with relatives. Thus the household GINI is strongly influenced by people's personal decisions in addition to their economic circumstances. More concretely, if I divorce my wife and we become two households does that mean that US economic inequality has increased? I would say not, but the household GINI…

If social circumstances make for a increase in divorces or a change in the fundamental structure of the family, I don't see why it's not something to take into consideration beyond "personal decisions". Could it be that conservatives might actually be right about that?

The point is that it doesn't tell you anything about "wealth inequality" insofar as the socialists whom push this discussion want it to.

Re: Wealth Levels, Wealth Inequality, and the Great Recession [pdf]

#36

Post by jebblue »

I didn't read anything about how the increasing numbers of older Americans who are not working might have a significant bearing on the matter.

edit: What I'm saying is, America has a baby-boomer generation that is retiring in droves, more power to them but don't do a study at a major university sounding alarm bells unless an important factor like a massively retiring baby boomer generation is considered.

Re: Wealth Levels, Wealth Inequality, and the Great Recession [pdf]

#37

Post by alexeisadeski3 »

thrownaway2424 wrote: post #25
alexeisadeski3 wrote: post #2

Long story short: The wealth of non rich Americans is almost entirely contained in their highly leveraged houses. If housing prices collapse, their wealth collapses. In 2008, housing prices collapsed.

What's the home ownership rate in the bottom quartile of net worth? The closes I could find was rate for the bottom 90%, which was apparently 66% in 2004.

I don't know. Probably pretty low. Which is why it shouldn't be surprising that so many have zero or near zero wealth.

Re: Wealth Levels, Wealth Inequality, and the Great Recession [pdf]

#38

Post by niels_olson »

cwal37 wrote: post #3
alexeisadeski3 wrote: post #2

Long story short: The wealth of non rich Americans is almost entirely contained in their highly leveraged houses. If housing prices collapse, their wealth collapses. In 2008, housing prices collapsed.

Not exactly. The 25th percentile's wealth was dropping even before the recession, which suggests some additional downward pressure, although I am not sure what that could be off the top of my head.

> some additional downward pressure, although I am not sure what that could be

I'm not an economist, so these are speculative, but seem reasonable based on the fact that we're talking about loss of wealth from households below median:

Loss of life (specifically heads of household) due to the wars (I'm guessing most military households, being young and having maximum education of high school to "some college" will be below median)

Increased energy costs (gas being a marginal cost would hit people with less marginal income harder).

Loss of jobs to automation (I'm thinking secretaries, anything that can be replaced by an iphone, etc)

Declining birth rate (last I heard total high school graduations were supposed to peawould tend to lead to oversaturated teaching jobs, also relatively low-paying.

Chrysler was in distress long before the recession.

Re: Wealth Levels, Wealth Inequality, and the Great Recession [pdf]

#40

Post by jayvanguard »

nickff wrote: post #4

This study is misleading, because it uses 'household' wealth, instead of individual wealth, and may be incorrectly interpreted as showing a decline in the middle class, when it is really showing the results of changes in family structure over the past 50 years. This graph shows how this choice affects the results: http://1.bp.blogspot.com/-g3WZGpDibPM/Up3ZAPRtScI/AAAAAAAAJq... The following blog-posts go in to more d…

Calling it misleading is stretch. There are dozens of factors that you can cherry pick to cast aspersions on the increase in inequality but if you step back they don't come close to explaining it. There are another dozen that can be chosen that do the opposite.
Post reply on HN