RES: The "law" of wealth concentration

Doug Henwood dhenwood at
Fri Aug 18 07:39:37 PDT 2000

Charles Brown wrote:

>CB: This is a lot more than a factoid.
>When you say "is responsible for" , what is the whole causal link ?
>How does the inheritance cause the distribution ?

I.e., the present distribution of wealth is somewhere between half and three-quarters the result of direct inheritance or the appreciation of inherited wealth. Imagine a society of four people. A has $0 in the bank; B has $200; C has $300; and D has $1,000. B and C's money comes from saving out of their meager paycheck and reinvesting the interest; D inherited $750 from her parents and the additional $250 came from capital gains on the original $750. Total social wealth: $1,500. Of that, $750, or 50%, is the result of direct inheritance, and $250, or 16.7%, is the result of appreciation of an inheritance. So, in this mythical society, 66.7% of total personal wealth is the result of inheritance, 33.3%, of diligent saving.


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