# Income, Wealth and Statistics

by Vanadium 50
Tags: income, statistics, wealth
P: 2,162
 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?
P: 813
 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?
P: 66
 Quote by Vanadium 50 Which is maybe a good example of the points I was making.
Hi Vanadium 50,

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 P: 14,633 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 P: 21,648  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. P: 66  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. P: 813  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 P: 21,648  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 P: 14,633 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 P: 21,398 Some numbers - http://www2.ucsc.edu/whorulesamerica/power/wealth.html PF Patron P: 161  Quote by Astronuc Some numbers - http://www2.ucsc.edu/whorulesamerica/power/wealth.html nice  PF Patron Sci Advisor P: 3,271 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 P: 98 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?
P: 1,064
 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 $$value is assigned, but the standard of living assigned for "poverty" hasn't change has it? The rich do get richer, the poor grow in population. (i.e. population "get poorer") I'd say nearly by definition it's not a fallacy, rich people don't put the money back into the system, and in the important areas. There is only so much a single person can consume, the rest is litteraly keeping the monies out the other people's pockets. Upto about 60k annual or so it's a standard of living issue, after that value, it's fun and games. It's no wonder the dicotamy between ideals of poor people & rich people in this context is what it is. The fallacy is in rich people's greed for wealth; specifically the line "I've earned it.". It's a meaningless objective/argument to someone who is hungy, in need of healthcare or to poor to become sufficiently employed (educated). I want to point out, in case it's not transparent, that I'm comparing those in poverty to those with say wealth in the 10's of millions & up, where the gap is blatant. Like I said, after a relatively low level of income, it's fun & games, trully. So a simular comparison could be made between those in poverty and those of mediocre income. Said different, I see no moral issue with "I have to take the bus", and someone who happened to get in on an "sure win" IPO drives a ferrari as a result. P: 1,121  Quote by nitsuj You're saying the deffinition of poverty is floating? I get that a$$ 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?
P: 1,064
 Quote by WhoWee What is the definition of poverty in the US?
It is "floating"! wow, in that case, I agree with russ_watters a bit more.

What a capitalist approach!

lol, reading about poverty, it appears there is "Absolute Poverty" (education / healthcare / food ect) and relative poverty (my neighbour is a millionaire, why not me!!).

Sorry I assumed poverty meant below some standard of living, based on basic human needs, and not on how well off you are compared to the neighbours. The latter is clearly independent of morals, assuming you are not in "absolute poverty".

Poverty is a really bad term for that context, the deffinitions between "Absolute Poverty" & "Relative Poverty" are completely different morally.
 Mentor P: 21,648 Yes, it is an odd and surprising phenomena that often times, the measure of poverty has little to do with standard of living.
 Mentor P: 14,633 This is also a problem with comparing poverty rates over time, as the definition and buying power have both shifted over time. Today, the fraction of families below the poverty line with multiple televisions is twice what it was for all families in the 1970's. While this tells you something about poverty trends, it also tells you something about the price of televisions.

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