Dodgy Data

Oxfam grabs a headline with a report telling us the richest 1% will own half the world’s wealth in 2016.

As with many reports coming from lobbying organisations, this one provokes scepticism.  Not outright dismissal, but a “really“, and a need to know what they’re actually measuring before I can treat it as meaningful.  It also provokes mild curiosity: how rich do you have to be to be in that 1% (not least because I have a sneaking suspicion it includes a great many people who our chattering classes don’t consider at all rich).

The Oxfam report itself is a mere twelve pages and disappointingly light on data.  If there’s any attempt to substantiate the headline claim then I missed it.  But googling “World Wealth” finds this report, which tells me total world wealth is projected to be $64.3 trillion in 2016.  OK, that’ll do for a ballpark calculation.  $64.3 trillion between 7 billion people is an average of about $9k per head.  If the top 1% own half of it, that’s $32.15 trillion between 70 million people: an average of $459k per head within that top 1%.

That’s £300k.  There must be a millions in Blighty with that much in housing wealth alone (and others correspondingly locked out).  Not to mention in other high-cost countries around Europe, America, Asia, and I expect even a few in the third world.  All above the average of that fabled top 1%.

But of course housing isn’t our only asset.  In Blighty and around the developed world, a big chunk of our wealth takes the form of Entitlements.  One such in the UK is the Basic State Pension, which is worth £200k, and even the poorest Brit is entitled to it.  It seems you can be in that top 1% without being rich enough to buy a house in Blighty!

Hmmm.  Oh dear.  Maybe Oxfam’s spin isn’t really very meaningful at all.  Except perhaps to highlight how incredibly egalitarian we are within Blighty – and probably all developed countries – once you include the effect of government actions.

Posted on January 20, 2015, in international, politics, uk. Bookmark the permalink. 3 Comments.

  1. Unfortunately, that “world wealth” report isn’t measurng what you’re comparing it to. That $64 trillion is annual GDP – that is to say, annual income, not “wealth” in the sense of accumulated assets (which would be considerably harder to estimate). So that “£300k” you calculated – that’s the *annual income* you’d have to be making, to be in the top 1% of global *earners*.

    Of course, in a place like Britain, where you get your share of various state assets as well as what you make with the sweat of your own brow, the actual income threshold is probably considerably lower than that. As a back-of-the-envelope estimation: the government administers about 43% of that GDP, so if we assume it distributes that with complete fairness (ha), the income threshold for “top 1%” in global terms for a person living in the UK would be £171k per annum. (And although I haven’t thought it through all the way, I suspect that would have to be *after tax*.)

  2. The BBC’s “more or less” looked at this. They tend to be well-informed, and good at debunking junk.

    They reckoned you need about £500k to be in that top 1%, and that something over 3 million Brits are included, of whom a large proportion are those owning London homes.

    Some slightly-interesting but unexplained international comparisons too. Fewer Germans in the top 1% (more egalitarian?), but – despite their Socialist tendencies – more French.

  3. Let’s try another approach: the world’s population is about 7 billion, so 1% of that is 70 million.

    Going purely on intuition… I would expect, let’s say, 25 million of those to be Americans, leaving 45 million for the rest of the world. And presumably they’d mostly be living in G20 countries. That makes “3 million in the UK” sound – quite modest, really.

    Yep, I daresay anyone who owns property in London (without mortgage) is a likely candidate. Which just goes to show how far screwed up the housing market really is in rich countries.

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