Well, this posting doesn’t say that, but over at the WSJ Wealth blog is a fascinating post on how few of the ‘rich’ inherited their money. While it doesn’t say that most made their money through entrepreneurship, my hunch is few earned their wealth through salaries alone. Many may have made it through stock options earned in entrepreneurial firms. Here is the post in its entirety:
My Krugman post brought a lot of emails asking about my assertion that “the vast majority of today’s rich didn’t inherit their money, but made it themselves.”
For the sake of brevity, I didn’t cite the research behind the statement. But since many of you have asked, and we aim to please here at the Wealth Report, here are my three main data points:
1. According to a study of Federal Reserve data conducted by NYU professor Edward Wolff, for the nation’s richest 1%, inherited wealth accounted for only 9% of their net worth in 2001, down from 23% in 1989. (The 2001 number was the latest available.)
2. According to a study by Prince & Associates, less than 10% of today’s multi-millionaires cited “inheritance” as their source of wealth.
3. A study by Spectrem Group found that among today’s millionaires, inherited wealth accounted for just 2% of their total sources of wealth.
Each of these stats measures slightly different things, yet they all come to the same basic conclusion: Inheritance is not the main driver of today’s wealth. The reason we’ve had a doubling in the number of millionaires and billionaires over the past decade (even adjusted for inflation) is that more of the non-wealthy have become wealthy.
So it’s not just that the same old rich folks are getting richer. The more-important shift is that the rich are getting more numerous.
The comments on the posting are pretty interesting with many believing that many have built off inherited wealth and therefore they had a leg up. Somewhat true, but their are many many people born into wealth who lose it. Do you honestly believe Paris will have more money than her parents — no way.