THE GCR IS ABOUT REDISTRIBUTION OF THE WORLD'S
WEALTH. ......HOW DO THESE REAL NUMBERS COMPARE TO THE GURU NONSENSE?!
Presenting the global wealth pyramid:
Here are the stunning facts:
- In 2012, 3.2 billion
individuals – more than two-thirds of the global adult population –
have wealth below USD 10,000, and a further one billion (23% of the adult
population) are placed in the USD 10,000–100,000 range.
- The average wealth
holding is modest in the base and middle segments of the pyramid, total
wealth amounts to USD 39 trillion, underlining the potential for new
consumer trends products and for the development of financial services
targeted at this often neglected segment.
- The remaining 373 million
adults (8% of the world) have assets exceeding USD 100,000.
- And then the top of
the pyramid: 29 million US dollar millionaires, a group which contains
less than 1% of the world’s adult population, collectively owns nearly 40%
of global household wealth.
- Some 84,500 individuals are
worth more than USD 50 million, and 29,000 are worth over USD 100 million.
- The composition of the
wealth pyramid in 2012 is broadly similar to that of the previous year,
except for the fact that the overall reduction in total wealth increases
the percentage of adults in the base level from 67.6% to 69.3% and
reduces the relevant population share higher up the pyramid by a
corresponding amount. The respective wealth shares are virtually unchanged.
Breaking it down by class.
Lower Class (base level of pyramid):
The various strata of the wealth pyramid have distinctive characteristics.
Although members of the base level are spread widely across all regions,
representation in India and Africa is disproportionately high, while Europe and
North America are correspondingly underrepresented (see Figure 2). The base
tier has the most even distribution across regions and countries, but it is
also the most heterogeneous, spanning a wide range of family circumstances. In
developed countries, only about 30% of the population fall into this category,
and for most of these individuals, membership is a transient or life cycle
phenomenon associated with youth, old age, or periods of unemployment. In
contrast, more than 90% of the adult population in India and Africa are located
within this band. In many low-income African countries, the percentage of the
population is close to 100%. Thus, for many residents of low-income countries,
lifetime membership of the base tier is the norm rather than the exception.
However, lower living costs mean that the upper limit of USD 10,000 is often
sufficient to assure a reasonable standard of living.
While bottom-of-the-pyramid countries have limited wealth, it often grows at
a fast pace. In India, for example, wealth is skewed towards the bottom of the
wealth pyramid, yet it has tripled since 2000. Indonesia has also seen dramatic
growth, and aggregate wealth in Latin America is now USD 8.7 trillion, compared
to USD 3.4 trillion in 2000. In contrast,
while North Americans dominate
the top of the wealth pyramid, wealth in the USA has grown more modestly,
from USD 39.5 trillion in 2000 to USD 62 trillion today.
Middle Class (middle level of pyramid):
The one billion adults located in the USD 10,000–100,000 range are the
middle class in the global distribution of wealth. The average wealth holding
is close to the global average for all wealth levels, and the total wealth of
USD 32 trillion gives this segment considerable economic weight. The regional
composition of this tier most closely corresponds to the global pattern,
although India and Africa are underrepresented. The comparison of China and
India is particularly interesting. India is host to just 3% of the global
middle class, and the share has been relatively stagnant in recent years. In
contrast, China’s share has been growing fast and now accounts for over
one-third of members, ten times higher than India’s.
Upper Class (upper level of pyramid):
High wealth segment of the pyramid The regional composition changes
significantly when it comes to the 373 million adults worldwide who make up the
“high” segment of the wealth pyramid – those with a net worth above USD
100,000. North America, Europe and the Asia- Pacific region together account
for 89% of the global membership of this group, with Europe alone home to 141
million members (38% of the total). This compares with about 2.4 million
adult members in India (0.6% of the global total) and a similar number in
Africa.
The number of people in a given country with wealth above USD 100,000
depends on three factors: population size, the average wealth level, and wealth
inequality within the country concerned. In 2012, only 15 countries have more
than 1% of the global membership. The USA leads with 21% of the total. In this
instance, the three factors reinforce each other: a large population, combined
with high mean wealth and an unequal wealth distribution. Japan is a strong
second and is currently the only country that challenges the hegemony of the
USA in the top wealth-holder rankings. Although its relative position has
declined over the past couple of decades due to the lackluster performance of
its equity and housing markets, Japan has 18% of individuals with wealth above
USD 100,000, a couple of points more than a year ago.
The most populous EU countries – Italy, the UK, Germany, and France – each
contribute 6%–8% to the high wealth segment, and each country has experienced a
small decline in its membership share during the year. For many years, these
countries have occupied positions three to six in the global rankings, but this
year China edged France out of sixth place, a dramatic improvement from the
situation in 2000, when China’s representation in the top wealth groups was too
small to register. Brazil, Korea and Taiwan are other emerging market economies
with at least four million residents with a net worth above USD 100,000. Mexico
accounted for more than 1% of the group in 2011, but has dropped below this
benchmark this year.
The Ultra-High Class (the very Top of the pyramid):
A different pattern of membership is again evident among the world’s
millionaires at the top of the pyramid (see Figure 3).
Compared to
individuals with wealth above USD 100,000, the proportion of members from
the United States almost doubles to 39%, and the shares of most of the
other countries move downwards. There are exceptions, however. France moves up
to third place in the rankings, and Sweden and Switzerland both join the group
of countries with more than 1% of global millionaires. Thank you Federal
Reserve.
Welcome to (say goodbye to) the Millionaire's Club:
Changing membership of the “millionaire group”; Changes to
wealth levels since mid-2011 have affected the pattern of wealth distribution.
The overall decline in average wealth has raised the proportion of adults with
wealth below USD 10,000 from 67.6% in mid-2011 to 69.3% in mid-2012 (as the
poor get poorer), and reduced the number of millionaires by slightly more than
one million (see Table 1).
There were 962,000 new millionaires in the
United States and 460,000 in Japan, but no significant increase in numbers
elsewhere. However, Europe shed almost 1.8 million US dollar
millionaires, most notably in Italy (–374,000), France (–322,000),Germany
(–290,000), Denmark (–179,000), Sweden (–142,000) and Spain (–87,000).
Australia, Canada, Brazil and Taiwan are the other countries in the group
of the top ten losers. The losses were sufficient to drop Brazil, Denmark and Taiwan
(along with Belgium) from the list of countries with more than 1% of the total
number of millionaires worldwide.
High net worth individuals; To estimate the pattern of
wealth holdings above USD 1 million requires a high degree of ingenuity because
at high wealth levels, the usual sources of wealth data – official statistics
and sample surveys – become increasingly incomplete and unreliable. We overcome
this deficiency by exploiting wellknown statistical regularities in the
upper parts of the wealth distribution to ensure that the top wealth tail is
consistent with the annual Forbes tally of global billionaires and similar
“rich list” data published elsewhere. This produces plausible estimates of the
global pattern of asset holdings in the high net worth (HNW) category from USD
1 million to USD 50 million, and in the ultra high net worth (UHNW) range from
USD 50 million upwards. While the base of the wealth pyramid is occupied by
people from all countries of the world at various stages of their life cycles,
HNW and UHNW individuals are heavily concentrated in particular regions and
countries, and tend to share a similar lifestyle, participating in the same
global markets for high coupon consumption items, even when they reside on
different continents. The wealth portfolios of individuals are also likely to
be similar, dominated by financial assets and, in particular, equity holdings
in public companies traded in international markets. For these reasons,
using official exchange rates to value assets is more appropriate than using
local price levels.
There are about 28.5 million HNW individuals with wealth between USD 1
million and USD 50 million in mid-2012, of whom the vast majority (25.6
million) fall in the USD 1–5 million range (see Figure 4). One year ago, Europe
overtook North America as the region with the greatest number of HNW
individuals, but tradition has been restored this year, with 11.8 million
residents (42% of the total) in North America and 9.2 million (32%) in Europe.
Asia-Pacific countries excluding China and India have 5.7 million members
(20%), and we estimate that there are currently a fraction under one million
HNW individuals in China (3.4% of the global total). The remaining 753,000 HNW
individuals (2.6% of the total) reside in India, Africa or Latin America.
Ultra high net worth individuals
There is an estimated are 84,500 UHNW individuals in the world,
defined
here as those with net assets exceeding USD 50 million. Of these,
29,300 are worth at least USD 100 million and 2,700 have assets above USD 500
million. North America dominates the regional rankings, with 40,000
UHNW residents (47%), while Europe has 22,000 individuals (26%), and 12,800
(15%) reside in Asia-Pacific countries, excluding China and India. In terms of
individual countries, the USA leads by a huge margin with 37,950 UHNW
individuals, equivalent to 45% of the group (see Figure 5). The recent fortunes
created in China have propelled it into second place with 4,700 representatives
(5.6% of the global total), followed by Germany (4,000), Japan (3,400), the
United Kingdom (3,200) and Switzerland (3,050). Numbers in other BRIC countries
are also rising fast, with 1,950 members in Russia, 1,550 in India and 1,500 in
Brazil, and strong showings are evident in Taiwan (1,200), Hong Kong (1,100)
and Turkey (1,000).
Although there is very little comparable data on
the past, it is almost certain that the number of UHNW individuals is
considerably greater than it was a decade ago. The overall growth in
asset values accounts for part of the increase, together with the appreciation
of currencies against the US dollar over much of the period.
However,
it also appears that, notwithstanding the credit crisis and the more recent
setbacks, the past decade has been especially conducive to the establishment of
large fortunes.
Hail Bernanke (and Kuroda, and Draghi, and Carney, and Jordan, and so
on), the ultra high net worth individuals on the chart below salute you.
