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## Income, Wealth and Statistics

Inequality still trending. Pew reports....

 The wealth gap between younger and older Americans has stretched to the widest on record, worsened by a prolonged economic downturn that has wiped out job opportunities for young adults and saddled them with housing and college debt. The typical U.S. household headed by a person age 65 or older has a net worth 47 times greater than a household headed by someone under 35, according to an analysis of census data released Monday. While people typically accumulate assets as they age, this wealth gap is now more than double what it was in 2005 and nearly five times the 10-to-1 disparity a quarter-century ago, after adjusting for inflation. http://www.aim.org/newswire/us-wealt...s-widest-ever/
Of course, what this actually means is that today's young can expect to be super-rich when they get old as by then the going disparity should be 470 to 1 or sumpthing.

Another sharp observation is the old get the lion's share of welfare too. Result!

 “It makes us wonder whether the extraordinary amount of resources we spend on retirees and their health care should be at least partially reallocated to those who are hurting worse than them,” said Harry Holzer, a labor economist and public policy professor at Georgetown University who called the magnitude of the wealth gap “striking.” Paul Taylor, director of Pew Social & Demographic Trends and co-author of the analysis, said the report shows that today’s young adults are starting out in life in a very tough economic position. “If this pattern continues, it will call into question one of the most basic tenets of the American Dream — the idea that each generation does better than the one that came before,” he said.
 Mentor That is what I would expect to happen as people move from defined benefits plans (pensions) and into defined contributions plans (401K's and similar). It is also what I would expect during a housing price slump. A 35-year old with the typical low US savings rate has essentially all his wealth tied up in one asset: the home. The more interesting statistics is that when this 35-year old becomes 65, under what assumptions does his standard of living exceed, lag or equal the present day 65-year-old.

Blog Entries: 1
 Quote by apeiron While people typically accumulate assets as they age, this wealth gap is now more than double what it was in 2005 and nearly five times the 10-to-1 disparity a quarter-century ago, after adjusting for inflation.
Actually, apeiron didn't say that, it was a quotation from another source. How do you adjust a ratio for inflation?

Blog Entries: 3
 Quote by apeiron Inequality still trending. Pew reports.... Of course, what this actually means is that today's young can expect to be super-rich when they get old as by then the going disparity should be 470 to 1 or sumpthing. Another sharp observation is the old get the lion's share of welfare too. Result!
Well, what has happened. Is it that older people got richer or young people got poorer?

 Quote by Vanadium 50 Which is maybe a good example of the points I was making.

I don't think its because they are sitting on nest eggs as many have been forced back into the workforce due to the GFC and the destruction of their hard earned wealth.

The following is a letter to the editor in todays Australian newspaper.

 Quote by Peter Troy Without wishing to comment adversely on pay rises for social and community workers, I am sure that there are many self funded retirees living on half the wage of $40,000 a year who would love a job earning that much instead of sitting at home checking their spreadsheet to see their savings dwindle down to nothing.  Mentor I don't find a letter to the editor a good counter-argument that differences in the way accounting for retirement plans is done need to be corrected for when drawing conclusions about how things have changed in 30 years. Mentor  Quote by John Creighto Well, what has happened. Is it that older people got richer or young people got poorer? Both, with the caveat that (as is part of the purpose of this thread), you need to be careful characterizing "rich" and "poor" based on net worth. Particularly when it comes to variation by age, net worth doesn't have a good correlation to the dictionary definition or the US measure of poverty. In other words, young people are taking on more debt, but that doesn't necessarily mean they are living poorer lifestyles.  Quote by Vanadium 50 I don't find a letter to the editor a good counter-argument that differences in the way accounting for retirement plans is done need to be corrected for when drawing conclusions about how things have changed in 30 years. At least it wasn't an editorial or a feature. This was in the Australian context where we had universal pensions and they are now being phased out and substituted with mandatory superannuation that is currently 12% of an employees wage. The rate had gone from 3% to 9% over the past 15 years so most of the people around the changeover have not only contributed less than they would have liked but have lost a fair portion on the stockmarket because thats where the Super funds invest. Blog Entries: 3  Quote by russ_watters In other words, young people are taking on more debt, but that doesn't necessarily mean they are living poorer lifestyles. Can you substantiate this with a source? I guess for people under 35 wealth isn't the best measure of prosperity but I can't expect the youth now to be significantly more prosperous given the large payments they must make on student debt. The fact that so many are forced to live at home could be a sign of not having the money to independently have a decent standard of living. I'll concede that wealth statistics could be somewhat misleading now because when the Baby boomers start drawing down their retirement savings asset valuations will likely fall. Mentor  Quote by John Creighto Can you substantiate this with a source? Sure. While the wealth gap has doubled since 2005, the average incomes of the young have only dropped somewhere on the order of 8% in 10 years: http://www.usatoday.com/news/nation/...g-people_N.htm Note that both of these are uselessly short time periods, though.  I guess for people under 35 wealth isn't the best measure of prosperity but I can't expect the youth now to be significantly more prosperous given the large payments they must make on student debt. I didn't say they were any more prosperous, much less significantly. Particularly in a recession, the young get hit harder, with higher unemployment and underemployment (due to not getting hired after college).  Mentor I suspect that the wealth gap since 2005 is a consequence of the drop in home prices. Younger people are more highly leveraged and tend to have a higher fraction of their assets in their homes. During the slide in prices, even though I lost more in absolute terms than my neighbor, I lost less relatively than her: I had more equity so less leveraging, and I had a more diverse asset allocation.  Admin Some numbers - http://www2.ucsc.edu/whorulesamerica/power/wealth.html Recognitions: Gold Member  Quote by Astronuc Some numbers - http://www2.ucsc.edu/whorulesamerica/power/wealth.html nice  Recognitions: Gold Member Science Advisor I found this diagram from xkcd fascinating: money. Especially relevant to changing relative wealth and the present resentment with big bonuses etc. is under the 'dollars' section 'Worker/CEO pay comparison' comparing 1965 rates with 2007 (adjusted for inflation). Garth Meanwhile, in Europe:  Banks are benefiting from a European Central Bank subsidy that could reach 120 billion euros ($158 billion), enough to pay every bonus at financial firms in London for the next 24 years at today’s levels. -- Bloomberg
Uhm... Okay?

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 Quote by russ_watters Those are issues with the stats themselves. Of equal concern to me is the common implication that wealth inequality is a measure of/proxy for poverty. This comes largely from the fallacy that wealth is a zero sum game: "the rich get richer while the poor get poorer."
You're saying the deffinition of poverty is floating? I get that a $$value is assigned, but the standard of living assigned for "poverty" hasn't change has it? The rich do get richer, the poor grow in population. (i.e. population "get poorer") I'd say nearly by definition it's not a fallacy, rich people don't put the money back into the system, and in the important areas. There is only so much a single person can consume, the rest is litteraly keeping the monies out the other people's pockets. Upto about 60k annual or so it's a standard of living issue, after that value, it's fun and games. It's no wonder the dicotamy between ideals of poor people & rich people in this context is what it is. The fallacy is in rich people's greed for wealth; specifically the line "I've earned it.". It's a meaningless objective/argument to someone who is hungy, in need of healthcare or to poor to become sufficiently employed (educated). I want to point out, in case it's not transparent, that I'm comparing those in poverty to those with say wealth in the 10's of millions & up, where the gap is blatant. Like I said, after a relatively low level of income, it's fun & games, trully. So a simular comparison could be made between those in poverty and those of mediocre income. Said different, I see no moral issue with "I have to take the bus", and someone who happened to get in on an "sure win" IPO drives a ferrari as a result.  Quote by nitsuj You're saying the deffinition of poverty is floating? I get that a$$ value is assigned, but the standard of living assigned for "poverty" hasn't change has it? The rich do get richer, the poor grow in population. (i.e. population "get poorer") I'd say nearly by definition it's not a fallacy, rich people don't put the money back into the system, and in the important areas. There is only so much a single person can consume, the rest is litteraly keeping the monies out the other people's pockets. Upto about 60k annual or so it's a standard of living issue, after that value, it's fun and games. It's no wonder the dicotamy between ideals of poor people & rich people in this context is what it is.
What is the definition of poverty in the US?

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