Seminario de grupo Desigualdad y Pobreza | How many rich are there? An affluence line beyond the top 1% threshold

How many rich people are there? While there is substantial interest in the "top 1%", the corresponding threshold remains arbitrary, and there is no consensus on how to define the rich. We propose an affluence line that can be implemented in any country with consumption and wealth surveys. A household is rich if its wealth allows it to sustain an abundant standard of consumption for the rest of its life without working and to pass on to its heirs a share of that standard of living. The line depends on the household head's age and sex through national life tables, and on a bequest share that we calibrate to structural estimates of bequest motives. It nests two common benchmarks as special cases: the pure life-cycle threshold, in which the household consumes all its capital, and the passive-income threshold, in which it lives off the returns and leaves the capital intact. We anchor the consumption standard in an original survey from Uruguay, where respondents place an abundant standard at the 97th consumption percentile. We then apply the line to eight countries: Chile, Colombia, Mexico, Uruguay, the United States, Italy, Spain and the United Kingdom. We use household surveys corrected with Forbes data for the top of the wealth distribution. Between 0.6% and 0.8% of households are rich in the Latin American countries, against 1.8% to 5.2% in the high-income countries. These households hold between 30% and 61% of total net wealth. Ignoring bequests would raise these shares substantially, mostly by counting as rich elderly households whose wealth would only finance their own remaining years.