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

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

#51

Post by Retric »

quicklyfrozen wrote: post #49
jahewson wrote: post #34

Earlier quoted context omitted.

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

It most certainly is the case in the US... http://en.wikipedia.org/wiki/Marriage_penalty

It's a generally around a 1/2 a % penalty which is swamped by other benefits.

AKA 2 incomes of $87,850 x2 = 175 700 vs extra 879$ in taxes.

At extreme incomes of say 20+M a year or below 18k it's actually far less than 1/2%.

However, there are huge benefits for SS for being a married couple even more so if there is a large income disparity, so on average if they plan ahead Marriage tends to lower taxes. On top of lower expenses which enable better tax avoidance mechanisms.

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

#52

Post by foobarqux »

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…

Middle class individual income have been stagnant since 1970.

https://www.youtube.com/watch?v=akVL7QY0S8A&t=9m3s

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

#53

Post by cloverich »

Here's a problem I have with the definition of "wealth".

My wife in I, who recently finished professional schools, earn (combined) in the top 5%. But because of our student debt, when I do a "wealth" calculator, I'm apparently literally at the bottom of the wealth chart - 0%. Leads me to question:

1. Is College attendance increasing, or decreasing over time?

2. Is price of College attendance increasing, or decreasing over time?

I suspect both increasing. Would that explain some (or most, or all?) of this phenomenon? Average or lower income individuals will mostly go from positive to negative to put themselves through school, while rich or upper class will not. Would be interested how much of the phenomena that would explain.

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

#54

Post by Daishiman »

alexeisadeski3 wrote: post #35
Daishiman wrote: post #18

Earlier quoted context omitted.

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.

Since when is "wealth" inequality a "socialist" thing? It's a matter of such importance that The Economist considers it the most pressing issue in economics of our times.

There is also nothing "socialist" about the publication. And the fact that the stats may be skewed by certain underlying variables (like every other study on Earth, who knew) does not invalidate the findings, although it does invite for further refinement of the data for more conclusive information.

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

#56

Post by bunderbunder »

alexeisadeski3 wrote: post #46
bunderbunder wrote: post #42

Earlier quoted context omitted.

Very interesting reads, thank you for sharing them. However, just looking at the time scale over which the net worth changes described in the original article occurred, and their magnitudes, it doesn't seem likely that the effect they describe can be explained so easily by social factors. Hypothesizing that it's just a social change related to shrinking households leads to some interesting questions about what that r…

The wealthier folks were simply less leveraged: 1. If you own 10% equity in a home which declines in value 20%, you now have negative wealth. A 200% decline. 2. If you own 50% equity in a home which declines in value 20%, you have suffered a mere 40% decline.

Not sure why someone voted you down, that quite believably would play into it and certainly doesn't seem to contradict the numbers in the paper in any obvious way.

(The wealthiest folks did see an increase in wealth over the 10-year time considered by the paper while everyone else saw a loss, but that's possibly because the wealthiest 10% also had a comparatively smaller amount of their assets tied up in their homes to begin with.)

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

#57

Post by alexeisadeski3 »

Paul_Dessert wrote: post #48
alexeisadeski3 wrote: post #45

Earlier quoted context omitted.

To be wealthy means that one possesses sufficient wealth (stuff) to live comfortably even after they quite their job. The bastardized term of "wealth" used here, however, refers simply to material possessions even when not in sufficient quantities to provide any passive lifestyle advantages; suddenly a paid off car worth $5,000 is "wealth." The estimated $30,000 in equity I possess on my $200,000 home is "wealth". It…

"Middle class people gradually build up a small stock of "wealth"" That's part of the point. As the chart in this study shows, the middle class is not building anything. In fact, it's declining.

I wonder if a large cohort of middle class individuals have recently retired.

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

#58

Post by araes »

alexeisadeski3 wrote: post #23
araes wrote: post #11

Earlier quoted context omitted.

My suspicion is that it may be due to the inflation adjusted real wage effects, which hit the bottom 25th percentile the hardest, as that is generally their only source of income, and their resulting margin for wealth storage is so much closer. [1] Honestly, real wage income has been flat since about 1965, and for many has been going down since the great recession. [2] And if you only got high school or less, well, y…

That would explain only a slowing in the rate of wealth increase, not a decrease in wealth.

Not necessarily. Everybody has a burn rate for money, as a natural feature of living in a market economy where we do work for pay. At its minima, its the cost to meet Maslow's needs. In the worst version, if our pay goes below the absolute minima, then we'll likely be eating our wealth, looking for other support, going homeless, or dying.

Unfortunately, we also tend to be habit creatures, and our burn rate often stabilizes to our pay and our social class (keeping up with the Jones'). If our real wage starts to go down, then we often have trouble adapting, and keep burning as if we were still at the prior equilibrium (credit card debt, eating into savings, taking out loans).

This is made even worse when the source of real wage reduction is the subtle erosion of our buying power through inflation. We complain about how much things cost, but we still see our paychecks slightly increasing so it seems good, and the burn gets worse.

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