A novel approach
To estimate the pattern of wealth holdings above USD 1 million requires a novel approach, because at high wealth levels the usual sources of wealth data – official household surveys – tend to become less reliable. We have overcome this handicap by exploiting well-known statistical regularities 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 at various stages of their lifecycles, HNW and UHNW individuals are heavily concentrated in particular regions and countries, and tend to share more similar lifestyles, participating in the same global markets for luxury goods, even when they reside in different continents. The wealth portfolios of these individuals are also likely to be more similar, with more of a focus on financial assets and, in particular, equity holdings in public companies traded in international markets.
For mid-2014, we estimate that there are 35 million HNW adults with wealth between USD 1 million and USD 50 million, of whom the vast majority (30.8 million) fall in the USD 1–5 million range (see Figure 4). There are 2.5 million adults worth between USD 5 million and 10 million, and 1.4 million have assets in the USD 10-50 million range. From 2007 to 2009, Europe briefly overtook North America to become the region with the greatest number of HNW individuals, but North America regained the lead in 2010 and now accounts for a much greater number – 15 million (44% of the total) compared to 11.7 million (34%) in Europe. Asia-Pacific countries, excluding China and India, have 5.6 million members (16%), and we estimate that there are now 1.2 million HNW individuals in China (3.4% of the global total). The remaining 925,000 HNW individuals (2.7% of the total) reside in India, Africa or Latin America.
The number of HNW and UHNW individuals has grown rapidly in recent years, reinforcing the perception that the very wealthy have benefitted most in the favourable economic climate. This year, for the first time, we are able to offer data to assess this claim. The four curves at the top of Figure 6 show the rise in the number of adults with wealth above USD 1bn, 100m, 10m and 1m, respectively, using 2008 as the base year. The three lowest curves capture the change in the amount needed to belong to the top 1%, top 10% and top 50% of global wealth distribution (50% being equal to median wealth). The final series shows mean wealth per adult in each year, again rebased to 2008.
At first glance, the evidence appears to confirm that the wealthiest groups have benefitted disproportionately. Between 2008 and mid-2014, mean wealth per adult grew by 26%; but the same period saw a 54% rise in the number of millionaires, a 106% increase in the number with wealth above USD 100m, and more than double the number of billionaires. However, little can be deduced about inequality trends from the fact that the number of millionaires and billionaires is growing faster than average wealth: this is almost certain to happen when wealth is growing, regardless of whether inequality is rising or falling. More relevant is the observation that the minimum wealth of the global top percentile in Figure 6 closely tracks the path of mean wealth: this shows that the 99th percentile at least has not outpaced the bulk of the population. On the other hand, the wealth required to be a member of the top 10% has risen at half the pace of wealth per adult since 2008, and median wealth shows almost no improvement, both results hinting at increased inequality. Drawing conclusions regarding inequality trends from complex data is clearly a difficult exercise. The next chapter explores wealth inequality trends in more detail and attempts to shed some light on a topic which is often the subject of public debate.