Emmanuel Saez and Gabriel Zucman, 2016, "Wealth Inequality in the United States since 1913: Evidence from Capitalized Income Tax Data"

What types of resources are not included in the authors' wealth definition?

- Accrued pension benefits payable to federal civilian and military personnel - Accrued "other post employment benefits" (health care) payable to federal civilian and military personnel - Accrued Social Security benefits - Accrued Medicare benefits - Unfunded portions of state and local employees pension benefits

What percent is held by the top 1% as of 2012? What percent is held by the top 0.1% as of 2012?

- Around 22% - 3x the amount in the 1970s

Is the share of each group's wealth held by older Americans rising or falling over time?

- Falling for top 0.1%: The elderly households' share of the top 0.1% of wealth has declined from about 46% in 1962 to 39% in 2012 - Rising for the rest of the population: 10% in 1960 to 25% in 2010

Describe the three series related to the wealth share of the bottom 90% of families.

- First series (open squares) is the actual observed data - Second series (red dots): what wealth share would have been if the savings rate had been equal to 3% every year from 1985 to 2012, all else equal - Third series (black dots): what wealth share would have been if the savings rate had been equal to 3% every year from 1985 to 2012 *and* income share of the bottom 90% had remained equal to 70%

The authors use two primary data sets to derive their wealth distribution measures. What are the data sets?

- Flow of Fund data collected by the Federal Reserve System from 1946 to 2013: Annual aggregated household asset data - Data from 1913 to 1945 are derived from other sources that are less accurate than the Flow of Fund

Why do the authors consider the distribution of wealth among the bottom 90% as representative of the distribution of wealth for the "middle class?"

- The authors note that the bottom half of the distribution - percentiles 0 to 50 - owns close to zero wealth on net. - the bottom 90% of the wealth is essentially the same as the top 50%-90%

Figure 10a depicts the authors' estimates based on their capitalization method along with other authors' estimates based on the Survey of Consumer Finances and on the wealth of decedents How do the authors' estimates compare to the other estimates?

- The authors' estimates and those based on the survey of consumer finances (adjusted to include the Forbes 400) are similar until the late 1990s - After 1990s the authors' capitalization method produces higher estimates of wealth attributable to the to 0.1% of families

Contrast the real average wealth of families in the top 1% and the bottom 90% based on Figure 7b.

- The earnings of the the bottom 90% is significantly less than the top 1% From 2008 onward: - The bottom 90% peaked around 130,000 and now its at 80,000 - A year later the top 1% peaked and then dropped and now is back at 14,000,000 as it was in 2009

What group of families within the top 10% accounts for the rise in the wealth shares among the top 10% as a whole since the late 1970s?

- Top 0.01% in general - All groups had slight growth, but the top 0.01% has significant growth

What is included in the definition of wealth used in this study?

- Wealth is the current market value of all the assets owned by households net of all their debts - includes pension wealth, deposits and bonds, equity, currency, sole proprietorships and partnerships, and housing net of mortgages

The authors attribute the decline in the bottom 90% wealth share to what two factors?

- decline in the bottom 90% share to the fall in the middle-class saving rate - Wealth inequality is fueled by both rising income and rising saving rate inequalities.

What is the difference between income and wealth?

- income = flow - wealth = stock

Compare Figures 2 and 7a. How does the composition of wealth differ among families in the top 10% and families in the bottom 90%?

- wealth owned by the bottom 90% has declined slightly and is primarily pensions ("pensions" include defined contribution and defined benefit retirement savings). - Since the late 1970s the ratio of total wealth to national income has risen, primarily as a result of rising pension wealth (which includes individual retirement accounts) - ??? graphs don't have anything regarding top 10%

What are the authors' two main findings?

1) wealth inequality has risen since the 70s - Top 0.1% of US holds 22% of wealth in 2012 - Almost has high as in 1916 and 1929 2) the wealth share of the bottom 90% increased from 20 to 35% by the mid 80s but declined to 23% by 2012 - Attributes this to the falling of the savings rate of the bottom 90%

Based on the authors' estimates, what percent of total wealth is held by the top 10% of families as of 2012?

77%

Do savings rates rise or fall with wealth? That is do families with higher wealth save at a higher rate than families with lower wealth?

Since the 1970s, savings rates rise with wealth class

Over time, what has happened to the savings rate of the families in the bottom 90%?

The most recent observation indicates that the bottom 90% saves about 0% of their incomes - savings rate of the bottom 90% was negative from the late 1990s to 2009

What is the definition of wealth used by the authors of this study?

the difference between how much assets a person has and how much debt they have