In fact, I'm surprised at how little advantage there is to having rich parents. Someone whose parents' income is in the top 1% and graduates from an elite university has less than a one-in-five chance of staying in the top 1%.
In fact, I'm surprised at how little advantage there is to having rich parents. Someone whose parents' income is in the top 1% and graduates from an elite university has less than a one-in-five chance of staying in the top 1%.
Even wealth is tricky as someone's wealth at death is probably a better indicator. Though again complicated by trusts that are not in their name.
And I fully accept I could be wrong. I'm currently googling a few things, to see if I am off here. I'm asking not to be a jerk, but this is put forward as fact here. So I'm assuming you have actual numbers to back this up.
See table 3: https://www.aeaweb.org/conference/2013/retrieve.php?pdfid=46...
Among people with income > $1M, 50% had this income for only 1 year.
https://taxfoundation.org/millionaire-status-fleeting/
One great way to have a lot of income is to sell a house that appreciated in value over many years. But it's hard to do that repeatedly.
A data set ending 1 year after the great depression would probably look the same.
It would be more interesting to take a longer term data, just like this study did. (Even 2005 to 2015 would be more realistic).
That is, of those that fell out, how many got there from inheritance?
Suppose it's larger, then the group could still be stable, but the churn between people at 1.1% and 0.9% would still cause the arbitrary measurement of top 1% to change a lot.
Now suppose the group is smaller than 1%, and the churn is instead at the top of the cluster directly beneath the stable group at the top, but still causes the composition of the top 1% to change constantly.
http://http://townhall.com/columnists/thomassowell/2007/11/2...
If the lottery winning family does not focus on wealth accumulation, then their wealth will regress towards the mean for their lifestyle. If the lottery winner puts all their winnings in an index fund, that would be a good start to creating such an intergenerational estate.
However, surprising perhaps to many people, not everyone is interested in turning money into more money. People who try to make money, surprise, have the skills, connections, and desire to do so. Of course, wanting to be such a "self-earner" doesn't mean one has the means or the luck to become one.
The key point is this: if your estate is currently extracting wealth from investments, odds are that you inherited that estate. Your family having money in the past is a precondition of such a state, but it is not sufficient to sustain it. Wanting to be the first generation of your family with wealth extraction privileges does not mean you'll succeed and most such aspirants fail.
As an example, a weathly family friend may help with tuition. Or funding a business venture, which is how people may go broke and then become rich again.
Things are much more stable in Europe, not to mention the US. The Nazis were, generally speaking, quite friendly towards accumulated wealth (unless you were a Jew, of course), and in case of Britain the last major "all of your accumulated stuff is ours"-thingie happened after the Norman invasion, almost 1,000 years ago.
https://en.m.wikipedia.org/wiki/Destruction_of_country_house...
"Our primary measure of child income is total pre-tax individual earnings. For single filers, individual earnings is defined as the sum of wage earnings and net self-employment income"
They go on to say how they also measured child income in the same manner as for parents (including investment income, etc) to see if that made a difference.