The stratospheric wealth of ultra elite in the US is hard to conceptualize but a new paper (pdf) from the National Bureau of Economic Research thinks the total share held by billionaires is likely much higher than previously estimated.
The authors Emmanuel Saez and Gabriel Zucman analyzed the work of a 2021 Princeton Economics paper which claimed that wealth held by the top 0.1% (those with $50 million in assets or more) in the US was about 16% of the nation’s wealth in 2016 and concluded that “wealth is less concentrated among the very rich (the top 0.1%) than many believe.” Saez and Zucman, however, thought the estimate seemed low and upon digging further, pinpointed discrepancies in calculating the wealth of an even tinier sliver of elite, the 0.01% was skewing overall conclusions.
Saez and Zucman say the Princeton paper failed to consider a few things. For one, it relied on tax data without incorporating filings to the SEC on large ownership stakes in listed firms. Princeton ended up underestimating the equity wealth of billionaire shareholders by a factor of 2.1, the researchers said.
Second, it took issue with the way the Princeton paper calculated returns from investment funds saying it was too small and unrepresentative and resulted in an underestimate by a factor of 1.6. Third, the way the Princeton paper estimated tiered partnerships and the measurement of business profits meant that large S-corporations were undervalued by a factor of 1.2 and top-owned partnerships by up to 2.2.
“Due to the lack of administrative data on wealth and the complex holding structures and tax-planning strategies of the ultra-wealthy, one has to combine a variety of data sources, make assumptions, and be open to revising earlier approaches when new information emerges,” wrote Saez and Zucman. Instead, a more accurate picture of the share of the nation’s wealth held by the 0.1% sits at about 20%, they say.
In global super wealth news: India’s Gautam Adani became the third richest person in the world this week, the first time an Asian has ever cracked the top three.
Estimated to be worth $137 billion, only Amazon founder Jeff Bezos (worth $153 billion) and Tesla CEO Elon Musk (worth $251 billion) are wealthier than Adani. The college dropout started out as a diamond trader before founding Adani Group, which has grown to encompass sprawling businesses across coal, energy, and ports. However, a recent report criticized the company for being “deeply overleveraged.”
This article has been updated to further differentiate between the top 0.1% and the 0.01%