The wealth pyramid depicts in stark fashion the differences in personal asset holdings present in today’s world. At the apex of the pyramid, the top two per cent of adults account for half of all global wealth, while the bottom half of the pyramidcollectively owns less than one per cent of net worth. The exact wealth pyramid numbers vary from year to year depending on prevailing economic conditions, particularly equity price movements. But changes in the shares of wealth over time tend to be very modest, both within countries and worldwide.Thus the distribution of wealth is both highly unequal and relatively stable over time.
While the wealth pyramid provides a snapshot of wealth ownership at a given point of time, this is not the complete picture. Within the overall structure, individuals – and generations of the same family – move regularly between the various strata. The extent to which the disparity evident in the wealth pyramid is tolerated – perhaps even encouraged – depends crucially on these dynamic considerations: the ability of individuals to accumulate wealth, and the degree to which the opportunities to acquire fortunes are open to all. When opportunities are more equal, wealth holdings should change with greater frequency and magnitude;in other words more wealth mobility should be observed.
Mobility has been widely studied in economics in the context of transitions in and out of unemployment, and in and out of poverty. Earnings and income mobility have also been given attention. In other social science disciplines, social and occupational mobility have been core topics for many years, and very often refer to inter-generational transitions, rather than movements within generations.
The study of wealth mobility poses special difficulties, because the asset holdings of specific individuals, or groups of individuals, need to be tracked through time. As a consequence, there is very little direct evidence via sample surveys, although other unconventional sources of information can help fill in the gaps. In addition to reviewing survey evidence below, we discuss recent findings based on the analysis of rare surnames across many generations, and summarize results derived from modeling changes in global wealth distribution. But first we take a look at a readily available source on changes in the wealth holdings of specific individuals, namely those who appear on the Forbes list of world billionaires.
Mobility of billionaires
Tracking changes in the asset holdings of ultra-high net worth individuals over time has become easier due to the regular publication of rich lists for a growing number of countries. Several studies have examined movements into and out of the Forbes 400 list of the 400 wealthiest Americans, and analyses could also be undertaken for the UK using the Sunday Times Rich List, and for China, India, and several other countries with similar data. Given our global perspective, we will focus on wealth mobility among those who appear on the Forbes list of the world’s billionaires during the period 2000 to 2010.
To improve accuracy, the Forbes lists for 2000 and 2001 have been merged to yield a total of 613 names for 2000-1,which are compared against the 693 names listed in 2005 and the 1,011 names recorded in 2010. Table 1 shows the number of billionaires in the G7 and BRIC countries, together with the percentage of the 2000-01 billionaires still on the list in 2005 and in 2010, and the percentage of the 2005 billionaires remaining in 2010. The increase in number of billionaires is particularly evident for the BRIC countries, where the number of billionaires nearly doubled from 2000-01 to 2005, and nearly quadrupled from 2005 to 2010, causing the fraction of Forbes billionaires in BRIC countries to jump from 5% of the world total in 2000-01 to 19% in 2010. Particularly striking is the rise from 2 to 64 billionaires in China from 2005 to 2010. Also notable is the decline in the number of billionaires over the decade in France, Italy and, most especially, Japan.