On Oct 24, 2011, at 9:57 AM, Bryan Atinsky wrote:
> I have been reading in some discussions of the OWS movement, a statement
> going along the lines of "Those born of parents in the one percent are
> almost guaranteed to remain part of the 1%, whereas those in the 99% are
> almost guaranteed not to become part of the 1%."
>
> I was just wondering who has good data on generational perpetuity of wealth.
It helps a lot, but there's no guarantee. Actually, membership in the 1% (by income, not wealth) is quite volatile. Most people have short stays at the top, then slip back a few percentiles.
Quoting from LBO #132:
> The George W. Bush Treasury Department did a mobility study based on tax data which does allow a look at the very high end (though it must be said that the high end often manages to excuse itself from paying taxes, so this is only a partial look). It found that of the top 1% in 1996 (minimum income: $284,603 in 2005 dollars), 40% were still there in 2005 (when the minimum income was $463,615 in the same 2005 dollars, up 63%).
>
> It must be said that the average incomes at the high end are pulled up by people who’ve had a very good year: 37% of 1996’s top 1% experienced real income declines of 50% or more by 2005, and another 26% took a 5–50% hit. But most of those that fell out of the top tier didn’t fall very far in relative terms: 75% were still in the top 5%, and 82% were in the top 10%. Of the top 5% in 1996, 51% were still there in 2005.
> Most people don’t travel very far from the income class of their parents, especially at the extremes: 42% of those born into the bottom quintile were in that same class as adults, and 39% of those born into the top quintile stayed there as adults. (See nearby graph for more.) There was more movement at the middle; for example, just 23% of those born into the middle quintile were there as adults; 41% moved down, and 36% moved up. But two-thirds to three-quarters of people don’t move more than one quintile—and moves from one extreme to another are quite rare. This and other studies have found that half the difference in income from one generation to the next can be explained by parental status.
> Research by Markus Jäntti and his colleagues show that as with the U.S., there is more stickiness at the extremes than in the middle in all countries they studied; being born rich or poor makes you a lot more likely to stay that way than being born in the middle. Jäntti & Co. also found that the American floor is especially sticky; 42% of men (sorry, again, but that’s whom the research is done on). born into the bottom quintile in 1958 were still there in the 1990s, compared with 25–28% in the Scandinavian countries. They’re also considerably less likely to ascend to the top fifth. But there’s not much difference in the adhesiveness of ceilings across countries; 36% of American men born into the top fifth were there 40 years later, pretty much the same as the UK and Scandinavian countries.