Just in case anyone knows

A comments discussion:


The bit you quote isn’t all that bonkers, Mr W. A little while ago I saw the claim (can it be true?) that median wealth in the UK is little different from median wealth in the US – it’s average wealth that differs a lot. That would be consistent with US plutocrats being “extremely” wealthy, in the sense of being much wealthier than our plutocrats.

Mind you, I doubt that such figures are worth much – how the devil does anyone know enough to talk usefully about wealth? Tax tends to fall on income and expenditure, not wealth. Maybe it’s easier with a plutocrat whose wealth is mainly in shares of one quoted company, but how would anyone else know that that’s true?

Tim Worstall

The median wealth claim wouldn’t surprise me all that much to be honest. The bottom 50% of the wealth distribution usually have perhaps 5% or so of all wealth. The bottom 30 to 35% usually have negative wealth – in aggregate. So, median wealth is going to be something like someone with £5,000 or maybe £20,000 or summat like that free and clear. Really wouldn’t surprise me to find that that’s a general number that applies across most rich country economies. A bit of equity in a home, the beginnings of a pension pot, something like that, that’ll be the median wealth number.

That’s the off the top of my head answer. Does anyone actually know? Median – not mean – wealth for UK/US/some other rich countries?

19 thoughts on “Just in case anyone knows”

  1. Does such a large bottom percentage in most Western countries have negative wealth if you count eligibility to future cash flows in the form of the state pension and/or benefits?

    I appreciate there’s plenty of youngsters with student loans, people with horrific credit card situations, occasionally quite a few people in even more horrific levels of negative equity… but would have thought except for some people in that last category the eligibility to a state pension makes up for it. I mean we’d count private pension as “wealth” in this category wouldn’t we?

  2. Surreptitious Evil

    They do count private pensions and they do ignore all ‘rights’ to public provision (on the spurious grounds that these can be reduced or revoked by subsequent politicians, while ignoring the fact that the very same can and do change laws that directly or indirectly affect the value of private property or investments.)

    It is a major problem, regularly highlighted, that is comprehensively ignored by the researchers concerned because a) because it is a bit harder than just parroting stats from the relevant national agencies and b) because they are commie (poss trot) [email protected] and refuse to recognise any facts that don’t support their pre-determined perversions.

  3. Oh come on, median is the only measure of central tendency that is any use for such a skewed distribution. Surely that’s what the economists always report?

    Gasp – it’s not.

  4. Accurately evaluating the wealth of the top .01% isn’t straightforward (even if it’s Jeff Bezos), as the Sunday Times regularly proves to us. Assets, in the form of shares and property, *may* be relatively public, but liabilities are much more likely to be hidden. The ST had Cap’n Bob ‘worth’ a net £400 million, right up to the point at which the Bouncing Czech went overboard and it turned out he wasn’t.

  5. @Middle of Nowhere – interesting numbers. Brits wealthier than Yanks by that measure. Much greater difference between the mean and the median in the US than in the UK. Due to greater inequality? All those tech billionaires?

  6. Yes, and it wasn’t so long ago that journalists quoted the Queen’s wealth in gazillions, apparently believing that she personally owned everything belonging to the state.

    But take HM: how could anyone outside her circle know how wealthy she is? “Oh, she owns Sandringham and Balmoral” people will say. Maybe she does. Maybe a Windsor family trust owns them. I don’t know. Do you? (No googling, now.)

    Recently I got into a spat with a fool on the internet about the huge wealth of the Duke of Westminster. The fool thought he knew how rich the Duke is. He cited all his London property. Yet all you have to do is visit the Companies House website to see that much of the ownership is by a trust not by His Grace. Ah, said the fool, that’s just a facade because the trust will just do exactly what the Duke orders. (I paraphrase: I don’t suppose the fool was familiar with the word facade.)

    If that were true no rich family would set up a trust to try to avoid the financial consequences of one of the next few generations of Duke being a spendthrift/gambler/alkie/drug-addict/madman/idiot/nitwit, would they?

    The world is well provided with fucking fools who are utterly confident in the truth of their misunderstandings.

  7. Perhaps I should refer to the last sentence of my post above as The Potato Proposition or the Kartoffel Konjecture.

  8. @ dearieme
    Sandringham is the country residence of the sovereign but is owned by HM personally because George VI had to buy it from his elder brother after the abdication.
    One of the nice quotes by Gerald Grosvenor “I’ld like to give it away but I can’t”

  9. This doesn’t feel right. The median American appears to have a noticeably higher standard of living than the median Brit, though that’s based on personal observation rather than hard data.

    Perhaps your figures need adjusting for purchasing power? Not to mention for current exchange rates, which are abysmal.

  10. It’s also annoying that ‘they’ want to tax ‘wealth’. A lathe can be ‘wealth’. So taxing it is taxing production. Reducing its productiveness. Why would you want to do that? Or am I missing something?

  11. @BIG

    As I’m sure you’re aware there are far more measures of average than mean, median and mode. I saw a list somewhere once that must have had something like 50 different measures of central tendency that might be used in different situations, damned if I can find it again though…

    To be fair there are good reasons to think about both mean and median here. The problem with the mean isn’t so much the skew – in fact in some respects it’s good the mean is affected by the skew, and makes the comparison with the median informative in its own right – but more what Dearieme and Chris are pointing out about the lack of accuracy at the extreme right end of the distribution. If you get a single multi-billionaire’s wealth “wrong” by a mere billion, and frankly that would be good going, then it distorts the entire UK average by £15 or so. So you could easily be thousands of pounds out just trying to account for the billionaires. Then there are plenty of small-time millionaires whose wealth is tied up in private companies, far more of them than there are billionaires. You could try winsorizing or trimming the mean to exclude this kind of problem, but doing so defies much of the point of using the mean at all, one key selling point being how convenient it is to work out group totals by multiplying their mean by the number of people …

  12. @john77: how do you know that George VI didn’t leave Sandringham to a trust?

    It’s the wisdom of hindsight but Sandringham is potentially only one plane crash away from ending up with The Red and The Black.

  13. @dearieme – the Grosvenor wealth is family wealth, rather than the Duke’s personal pile. The trusts are designed to protect that wealth over the very long term. You could argue that anything from all to none of that wealth is his. I suppose the best answer would be however much cash he’d be left with if he tried to liquidate the lot within the next 12 months. I suspect that would be a surprisingly low number, certainly not high enough to try to force it out of him via a swingeing wealth tax.

    The Sunday Times Rich List is based on a lot of back of a fag packet assumptions. A mate of mine used to work for British Land and said Sir John Ritblat used to guffaw mightily about how much the list underestimated his wealth. I know other people who have exaggerated their wealth in press interviews and then had the ST use those figures without question. Plus most of the entries have something like ‘and we add £5m for personal property, possessions etc’ – these numbers are simply guesses.

  14. Andrew M. I don’t doubt that Americans have a higher standard of life, but it’s how you define that counts.

    Kiwis don’t earn much at all. Our mean is even lower because our rich move overseas.

    Most Kiwis can afford much nicer houses than the equivalent Brit. We spend far less on commuting, both time and money. But all overseas travel is far more expensive and our schools are better. Which do you value more?

    If you want a nice house and be able to go surfing on the weekend all year or love gardenning, you would live in NZ. If you value travel, consumer goods and don’t mind terrible weather, you live in the UK.

  15. @ dearieme
    I don’t know but I should think that exceptionally unlikely since the King was not subject to taxes in 1952 so I cannot see what the point would have been. I also think that when, in my childhood, someone made the point about George VI having to buy it from Edward VIII they would have mentioned if he had subsequently changed the system.

  16. Isn’t the problem with wealth the liquidity factor, if the wealthy have to liquidate a load of assets to pay a 6% wealth tax won’t that push the value of assets down (also leading to their net worth and the tax they have to pay falling)

  17. Quite, Ummmm. You’re talking about the difference between value & price. The notional value of people’s wealth bears no relationship to what it might realise in a market. Values are always fantasy numbers. Introduce a 6% wealth tax & the wealthy have to liquidate 6% of their assets to pay it. Who’s going to buy it when all of the wealthy are sellers? The market price will tend to zero.

  18. “the King was not subject to taxes in 1952 so I cannot see what the point would have been.” The point of a trust isn’t tax avoidance, it is to deny control to an heir who might piss it all away so that there’s nothing left for the next in line.

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