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Bernie Sanders, who is running for president in 2020 gave a speech a few days ago. He makes a claim which goes like the following:

Today the world's richest 26 billionaires, 26, now own as much wealth as the poorest 3.8 billion people on the planet, half of the world's population.
Link to video

This is a surprising figure, at least to me (though maybe it shouldn't be.) I'm just wondering if it's true.

Edit: My question has been marked as a potential duplicate. I can't really click "Yes, that solved my problem" because they are two different claims. One claim is about the wealth comparison of 5 billionaires to the poorest half of the world's population, and the other claim is with regard to 26 billionaires. However if anyone thinks it's a duplicate, I'm happy to have the question closed.

Zebrafish
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    I have made an Excel spreadsheet summing up the worth of billionaires at Forbes (https://www.forbes.com/billionaires), here: https://www.414soft.com/billionaires.xlsx. Free to use. Here is probably a good place to investigate further: https://data.worldbank.org/, resources from Oxfam can be found here: https://oxfam.app.box.com/s/f9meuz1jrd9e1xrkrq59e37tpoppqup0/folder/64176815162 –  Jun 24 '19 at 12:49
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    Likely, everyone here owns more than the poorest 1 billion people combined. Statistics like this can be deceiving. – Sjoerd Jun 24 '19 at 23:15
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    @Sjoerd It's highly dependent on if "wealth" calculations include debt. –  Jun 25 '19 at 00:09
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    Many people confuse wealth with income. A person may have a $300000 house with no mortgage, giving them a net wealth of $300000, but may be reliant on a pension for survival. By this measure they're wealthier than someone earning $100000 pa who has a $250000 mortgage on a $300000 house. But most people would consider the person with the higher income to be the richer of the two. – Stephen Jun 25 '19 at 04:39
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    I'd even argue that wealth calculations are altogether meaningless. You could be a multi billionaire who owns the equivalent of a train company just before air travel really took off and bankrupted them all. Ultimately wealth is highly volatile and at the top end, based on fuzzy valuations that can change very quickly. – Stephen Jun 25 '19 at 04:41
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    I don't find that figure surprising or hard to believe at all. – Marc.2377 Jun 25 '19 at 04:58
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    @Stephen though you might be hard pressed to find an ex-Billionaire who lost his money and then went on to not have safe drinking water and had to take his kids out of school at 12 years etc. -If you look at 'i lost all my money' stories, they always are still rich afterwards, just because 1/1000th of a Billion is still a million. Any Billionaire can loose 99.9% of his money and still be a millionaire... most could lose an even higher percentage. – bukwyrm Jun 25 '19 at 05:34
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    @bukwyrm Which is exactly what Sjoerd is talking about, really; it's surprisingly hard for people in developed countries to understand what "poor" means. If *you* lose all of your wealth overnight, you're still not poor (especially if you still have a job; it's much worse for e.g. retirees). An ex-billionaire who suddenly needs to pay taxes on the billions he no longer has will go bankrupt; but he still lives in a developed country, with all the massive infrastructure, work productivity etc. At the other end, people tend to look at "$1 per day!" and forget "also has cows and fields". – Luaan Jun 25 '19 at 07:58
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    "Related" in the right bar on this page has this question: https://skeptics.stackexchange.com/questions/26536/do-the-worlds-eight-richest-people-have-as-much-wealth-as-the-poorest-50?rq=1 – Bernhard Döbler Jun 25 '19 at 10:05
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    @Brythan could you go into detail about what you would consider as an answer? I.e. how do you think 'A is richer than B' can be computed? How does a person who has no legal tender, but one sickly cow and the obligation to help his neighbor build a shed (=debt?) stack up against someone who has personal debt of 100M$ to a bank, shares 'worth' 100M$ (less if you really sell them at once), and a tax-evasion-scheme fund in his name that will realistically pay all expenses relating to food, shelter, transport, school, health, for him and his family for the next 300 years? – bukwyrm Jun 25 '19 at 12:41
  • I think you should follow up on https://money.stackexchange.com/ to get the particulars on "wealth" and other related terms. –  Jun 25 '19 at 16:01
  • @bukwyrm That is all correct. My point was only that focussing on wealth instead of income really doesn't tell the whole story. And you're now adding public wealth and environment into the story as well. The way I look at it, wealth is power, income is livelihood. – Stephen Jun 25 '19 at 22:59
  • He's a person who also equates revenue and profit so what does that tell you about his willingness to abuse language and stats. – Randy Zeitman Jun 26 '19 at 03:06
  • @Stephen last I checked, train companies still exist. So your hypothetical billionaire went from filthy rich to just rich. There are people who really lost everything, to the point of homelessness. They are mostly middle-class and I don't think even one of them was rich before. – Tom Jun 26 '19 at 04:51
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    @Tom actually, famously, there were a huge number of train companies in the US that went bust when air travel became affordable in the 70s. – Stephen Jun 26 '19 at 05:34
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    @Stephen but did the owner loose every possession he had? I guess not. Enterprises go bust all the time, sometimes even furthering the personal wealth of those involved. --- But about the statistics: if one wanted to compare the power or livelihood of people worldwide, would that be possible in your opinion, if so, how? – bukwyrm Jun 26 '19 at 05:51
  • Possible duplicate of https://skeptics.stackexchange.com/questions/26536/do-the-worlds-eight-richest-people-have-as-much-wealth-as-the-poorest-50?rq=1 – Murphy Jun 26 '19 at 11:33
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    Possible duplicate of [Do the world's eight richest people have as much wealth as the poorest 50%](https://skeptics.stackexchange.com/questions/26536/do-the-worlds-eight-richest-people-have-as-much-wealth-as-the-poorest-50) – Murphy Jun 26 '19 at 11:34
  • To be in the US top 1% the FAMILY needs to make ~$420K (~$210K/parent). That may be a lot, but is not astronomical as many are led to believe. Statistics are deceptive, especially since purchasing power is more important than earnings and that often relies on financial relativity. – vol7ron Jun 27 '19 at 15:12
  • The richest 3 Americans are as rich as the poorest half of Americans. However you slice it, the inequality is extraordinary and disgusting. – Simd Jul 01 '19 at 08:14
  • @Anush Is that true due to subtracting debts of the poorest half of Americans to arrive at their net wealth, as was done with the Oxfam report? I agree the inequality is enormous, but using that methodology is questionable and the figures I think are misleading if done in that way. – Zebrafish Jul 01 '19 at 12:35
  • @Zebrafish You get a very similar answer irrespective of how you play the game. E.g the richest 400 Americans had a combined wealth of $2.68tn ($2,680,000,000,000) in 2017. You need to add up a s**t load of poor/slightly poor/not-that-wealthy people to get to anything like that number. – Simd Jul 01 '19 at 12:53

7 Answers7

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Short Answer: True.

Every year, in time for Davos (i.e. the Annual Meeting for the World Economic Forum), Oxfam releases a report about the state of inequality. Here's a link to their latest. Additional link to calculations down at the bottom of the page. https://www.oxfam.org/en/pressroom/pressreleases/2019-01-18/billionaire-fortunes-grew-25-billion-day-last-year-poorest-saw

I'm pretty sure the US senator was referring to that.

Now, a couple of things to note:

  1. If Oxfam's research were bad (it's pretty darn good), it would be discredited by many many business folk and of course top-rated economists - especially since they habitually present this at the most august fora they can get into. The WEF is up there, obviously.

  2. While Oxfam reports are "grey literature", serious academics like Sen, Stiglitz and Piketty have made the same point over the past 10 years, albeit differently nuanced - academic writing generally does not aim at the same shock factor that INGOs aspire to.

  3. There is a distinction between income inequality, wealth inequality... and other important inequalities (e.g. gender). Oxfam's 26 vs 3.8 Billion refers to wealth inequality.

Update: See footnote 1 for the link to the 26 richest (and their worth) and footnote 2 for the link to the poor (World Bank data-tables). Both notes on page 76 of the Oxfam report. https://oxfam.app.box.com/s/f9meuz1jrd9e1xrkrq59e37tpoppqup0/file/385579400762

RandomForestRanger
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    Criticis of oxfams statistics usually focus on their choosen measurement, which is net wealth. Net wealth, in this case, means that the "poorest" are those heavily in debt. Their debt is also subtracted from whatever wealth anyone in the "poor half" has. In short, if you are completely broke but debt free, you are (by oxfam measurements) richer than the entire poorest billion. –  Jun 24 '19 at 11:32
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    @Guran True, but of course the counterpoint (and I presume Oxfam's argument) is that ignoring debt doesn't make much sense. Taking out a million dollar loan does not make you a millionaire. In any case, ignoring those with net debt still gives a similarly small number. – Bryan Krause Jun 24 '19 at 15:19
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    I think you are missing the point. If a newborn baby is richer than a billion people, does that tell us something about the newborn baby? Or the billion people? Also consider the possibility that someone like Donald Trump is a net debtor of, say, a billion dollars (probably true during one of his bankruptcies). Are we really holding up a person like that as a sign of inequality because he's so *poor*? – Brythan Jun 24 '19 at 23:19
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    The biggest criticism in my mind is that the common person conflates wealth with purchasing power. Then they conflate cash with credit. Calculating wealth in this matter to determine equity while neglecting these other two points gives us, at best, a meaningless metric. Further conflation is wealth vs income. All of these things matter if we're examining equity. –  Jun 25 '19 at 00:14
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    @Brythan reminds me of the following: “They saw a homeless man sitting outside Trump Tower. “I remember my father pointing to him and saying ‘You know, that guy has 8 billion dollars more than me’" – Andrew Grimm Jun 25 '19 at 02:39
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    @Brythan Trump never went bankrupt. Several businesses he was involved with went bankrupt. – Acccumulation Jun 25 '19 at 02:54
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    @BryanKrause How does *including* debt make sense, when it results in a negative net worth? Subtracting debt from assets makes sense when there are assets, since those assets can be seized, and so in some sense aren't fully "owned". But if debts are more than assets, in what sense does someone have a negative amount of money? How does it make sense to subtract one person's debt from *another* person's assets when calculating total wealth? – Acccumulation Jun 25 '19 at 03:01
  • [Welcome to Skeptics!](http://meta.skeptics.stackexchange.com/questions/1505/welcome-to-new-users) The page you link to does not contain support for the claim. Please find a reference that addresses the statistic in the question, and quote it to show it supports your argument. – Oddthinking Jun 25 '19 at 07:11
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    @Acccumulation It makes sense when you consider the whole economy. For every debtor, there is a creditor - as long as the creditor can reasonably expect the debt to be repaid, the math works out with the creditor's net worth including the debt as a positive asset, and the debtor's as negative, adding up to zero. It still doesn't make much sense in the context of wealth comparison, mind - being able to afford a debt is again something that makes you relatively rich; you can use the debt to fund a venture and earn higher returns than otherwise. Many poor regions are poor because they lack that. – Luaan Jun 25 '19 at 08:03
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    It's also worth noting, that by Oxfam's methodology, you can be the poorest person in the world and still richer than billions of other people. Oxfam's statistics are correct... but thier methodology is misleading. – NPSF3000 Jun 25 '19 at 13:14
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    @Guran You are correct, but it causes results that would be misleading to non-economists. Because of student loans, my net-worth is negative, but I have significantly greater access to resources and a higher standard of living than, say, a subsistence farmer. – TimothyAWiseman Jun 25 '19 at 16:37
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    @TimothyAWiseman The claim isn't about standard of living, it's about wealth. – Bryan Krause Jun 25 '19 at 21:19
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    @BryanKrause in the mind of the average non-economist those two things are far more intertwined and related than they technically are. I think most people would be surprised to learn that most subsistence farmers are technically more wealthy than most beginning doctors or lawyers because most beginning doctors and lawyers have a negative net worth due to student loans and other debt incurred during their education... – TimothyAWiseman Jun 26 '19 at 01:13
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    @Timothy Many perfectly normal people in Western societies would probably be even more surprised to learn that they are technically less wealthy than a homeless beggar on the streets of Jakarta. – Janus Bahs Jacquet Jun 26 '19 at 09:35
  • What does [august fora](https://duckduckgo.com/?q=define+%22august+fora%22&ia=web) mean? Today I learned what gray literature is. – Chloe Jun 26 '19 at 19:00
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    @Chloe, fora = plural of forum. A bit highfalutin, sorry. Ditto for "august", in this sense, "respected". I.e. there is a high standard for entrance to the WEF's annual meeting. – RandomForestRanger Jun 27 '19 at 06:50
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    @Luaan But the creditor cannot, on average, reasonably expect the debt to be repaid. The creditor also doesn't. The creditor enters a calculated gamble, much of the time, and expects a certain percentage of the debt not to be repaid. – sgf Jun 27 '19 at 11:38
  • @BryanKrause The combined wealth of the "poorest" 3.8 billion people is basically zero. The 26 poorest people almost certainly own the same as the combined wealth of the 3.7 poorest people. Clearly the world has a big problem with inequality but the headline is cherry picked statistics designed to mislead. – A Simmons Jun 27 '19 at 22:53
  • @ASimmons I don't want to go digging for the report again, but at least an earlier version (might have been 2015?) had a comparison omitting those people with negative wealth. It changed the number then from ~40 to ~80. 26 having as much as 3.8 billion versus some number <100 having as much as 3.8 billion really doesn't change the point of the message. – Bryan Krause Jun 27 '19 at 23:01
  • @sgf Which is of course what the creditor charges as part of the interest. In the end, the expected total yield on the debts is positive for the creditor on average (unless you're very bad at your chosen profession, or lending to friends and family etc.). – Luaan Jun 29 '19 at 16:55
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That statistic is at least plausible, and likely true. Children have essentially no wealth, so to start out the richest are already ahead of about 25% of the world (about 1.9 billion people) simply by having a positive net worth. The next 1.9 billion is made up of the impoverished adults, young adults that are just starting careers, working class populations, and middle class adults.

Wealth is misleading when used as a statistic because it's largely a function of saving over time, the rule of thumb for savings is that they double about every 7 years when invested wisely. The top 26 billionaires are people that have been extremely wealthy for decades. The thing to keep in mind with these numbers is that the average retiree will also have as much wealth as about 50-60% of that number, simply because most haven't had time to accumulate any wealth.

Ryathal
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  • "Invested wisely" is the important part. Not everyone invests (whether due to lack of willingness to do so or simply not having the money to spare), and those that do don't always invest wisely. – JAB Jun 24 '19 at 21:47
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    This answer was posted before it was migrated to Skeptics.SE. Here, it doesn't meet the standards. Please edit. – Oddthinking Jun 25 '19 at 07:02
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    The statistic is considering worldwide population. The average retiree of the world will have not even close to 50-60% of the top 26 people's wealth, unless he happens to be in the US. – Gnudiff Jun 25 '19 at 08:36
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    Even in the US the average retiree will be extremely far away from that. – Sebastiaan van den Broek Jun 26 '19 at 04:36
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    Wait, you are claiming that "wise investment" leads to long-term 10% return? I mean, "during a period of unprecedented world economic growth in history expansion invested in a country that won 3 major world conflicts without taking significant damage"? Ok. But, 2000 to 2019 was 4.9% annual in that same country. When talking 10-year returns, cherry picking a century and after-the-fact country is going to get you bad data. – Yakk Jun 26 '19 at 16:49
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    "rule of thumb for savings is that they double about every 7 years when invested wisely" I doubt this is true for most people, obviously, you can claim that people that do not meet this doubling are not true Scotsmen. https://en.wikipedia.org/wiki/No_true_Scotsman – Quora Feans Jun 26 '19 at 22:00
  • Establishing the proportion of adults in net debt would be a useful point, too - most people with mortgages, for example, are in net debt, so would likely be added to the billions. – Dewi Morgan Jul 08 '19 at 22:12
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Short Answer: True.

Oxfam's research is available on their website https://www.oxfam.org/en/research/economy-99 and is based on "Credit Suisse Global Wealth Data book 2016"

https://www.oxfam.org/en/pressroom/pressreleases/2017-01-16/just-8-men-own-same-wealth-half-world http://publications.credit-suisse.com/tasks/render/file/index.cfm?fileid=AD6F2B43-B17B-345E-E20A1A254A3E24A5

I have no reason to dispute this evidence at this time.

Long Answer: Lies, Damned Lies, and Statistics.

The methodology that Oxfam uses is net wealth NOT wealth. What this means is that when they talk about the bottom 50% - they're talking about people in net debt (think medical student) PLUS people with small positive sums (e.g. a rice farmer in China). They combine this wealth together, and they then compare this to the billionaires in question.

As an illustration, imagine we had 5 people in the world, with net wealth's as follows:

-2 -1 0 1 2

From this you can make the following claim:

The richest person has more wealth than the bottom 80% of the population!

However, you can also make the following claim:

The poorest person has more wealth than the bottom 60% of the population, including themselves!

How? Simple, because -2 + -1 + 0 = -3. -3 is smaller than -2. Hence the poorest person it richer than the bottom 60% even though he's part of the 60%. It's completely true... but also very misleading if you don't understand the methodology being used.

Looking at the numbers

If you look at the Global Wealth Databook, on page 148 you'll find the following summary:

(Deciles)

0 1 2 3 4 5 6 7 8 9

(Wealth share, in percent)

-0.4 0.0 0.1 0.2 0.3 0.6 1.1 2.3 6.8 89.1

Note that the bottom 40% = -0.4 + 0 + 0.1 + 0.2 = -0.1.

So as long as your net wealth is above -0.1% of world wealth, that is -271.27Billion*, then you are richer than the poorest 40% of the world... even if you are deeply in debt and part of that 40%.

Also note that the bottom 50% = -0.4 + 0 + 0.1 + 0.2 + 0.3 = 0.2

0.2% of world wealth is ~ $542.54Bn. So if you get a group of people whose net wealth is higher than that (say the top billionaires) then you can claim they're richer than the bottom 50%!

This ignores the fact that the bottom 50% actually own far more - but they've got debts that 'net out'.

*(not sure that figure in $, but let's assume it's world wealth (pg 146) 271.270TRN*-0.1%)

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NPSF3000
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    Oxfam has [directly addressed this criticism](https://blogs.oxfam.org/en/blogs/15-01-27-wealth-debt-inequality-criticism-response): it isn't as large as you suggest: It changes the top 1%'s share from 48.1% to 47.9% – TemporalWolf Jun 25 '19 at 18:44
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    @TemporalWolf good link, but that is not the claim being addressed in this question. The question is about the top 26 people, not the top ~75 million. – NPSF3000 Jun 25 '19 at 19:12
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    If you read the linked article, in 2014, 147 billionaires owned $2.6T; as much as the bottom 40% (when excluding the 10% that's negative). While those don't line up directly with the claim, the essence of the claim is still sound even if you throw out all negative net wealth persons: "two busloads" of billionaires have the same net worth as a large fraction of the rest of the world. – TemporalWolf Jun 25 '19 at 19:22
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    @temporalwolf, fair enough but Oxfam insists on making these claims even *after* writing that article (2015). So if anything, it just proves that Oxfam is *deliberately* using misleading statistics. – NPSF3000 Jun 25 '19 at 19:40
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    I'm trying to understand why you're convinced this is misleading: again, even removing the negative net wealth group doesn't largely affect the sum. And the position that some significant fraction of that debt is held by rich people who 'net out' has yet to be backed by a source. – TemporalWolf Jun 25 '19 at 19:56
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    @temporalwolf, Oxfam make a claim, and that is what is being addressed. If they made a different claim, with different methodology then that is what I'd be addressing. Take it up with Oxfam. – NPSF3000 Jun 25 '19 at 20:29
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    @TemporalWolf Oxfam’s response doesn’t address the issue, it just obfuscates it a bit more. They’re still using net wealth numbers, and plenty of people in their second and third deciles will have financial assets, but counterbalancing debts. It would be a better analysis if it compared incomes rather than assets, including incomes derived from ownership of assets. But it wouldn’t look anything like as stark. – Mike Scott Jun 26 '19 at 16:24
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    @MikeScott Can you support income as a better standard? There are some high profile counter-examples: the President wrote off $916M in 1995, which [may have zeroed out his income for tax purposes for nearly twenty years](https://www.nytimes.com/2016/10/10/us/politics/donald-trump-taxes.html). It also neglects non-income like stock holdings: about 96% of Bezos' net worth is his Amazon stock holdings, which are not income until you sell them: he could potentially have zero income, or negative, in a year despite being the richest man in the world and having his net worth go up billions. – TemporalWolf Jun 26 '19 at 16:57
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Oxfam published this claim based on calculations in a January 2019 briefing paper with a rather laborious title: Public Good or Private Wealth? Universal health, education and other public services reduce the gap between rich and poor, and between women and men. Fairer taxation of the wealthiest can help pay for them.

In particular, in Figure 3: Wealth of the bottom 50% of global population and the accumulated wealth of top 50 billionaires, 2017 and 2018:

Figure 3

The data for the calculations is sourced from Forbes (for billionaires) and Credit Suisse (for bottom 50%).

A note explains a minor caveat:

Wealth information from both sources are for two different months: March for Forbes and June and December for Credit Suisse in 2018 and 2017, respectively. Strictly speaking, this means that 26 (43) billionaires had as much wealth in March 2018 (2017) as half the population did in June 2018 (2017).

Oddthinking
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Others have pointed out the catch to subtracting the debt of the people with negative net worth from the wealth of people with moderate incomes. No need to repeat that.

Let me also add that such statistics depend greatly on how one calculates wealth, and the definition can make the results very misleading.

For example, you often read statistics like this page, https://www.givewell.org/international/technical/additional/Standard-of-Living, that says that economists calculate "the number of people living on under $1.25 a day at about 1.4 billion worldwide".

A little thought will show that that cannot possibly mean that their lifestyle is comparable to that of someone in America or Western Europe trying to live on $1.25 per day. I sincerely doubt that it would be possible to buy sufficient food to live for $1.25 a day, never mind other necessities of life.

Not to say that these people are not extremely poor. I certainly wouldn't want to switch places with them. But they're not THAT poor. They get these statistics by ignoring many forms of real wealth. Many of these people are subsistence farmers. They own land for farming, or live in a culture that pays little attention to the idea of legal title to land. What would be the market value of this land if it was in Los Angeles? By that standard some of these peasant farms would be quite wealthy. They may hunt animals for meat and use their skins for clothing. What is the market value of this? These things are not counted in these statistics. Etc.

On a less dramatic scale, you often see statistics contrasting the wealth of the richest Americans to the average Americans. According to this page, https://www.thebalance.com/american-net-worth-by-state-metropolitan-4135839, "The concentration of wealth in the U.S. continues to deepen as the top 1 percent of wealthiest U.S. households now holds 24 percent of liquid wealth. Non-affluent households, representing 70 percent of U.S. households, control less than 10 percent of the nation’s liquid wealth."

Of course rich people are richer than poor people -- duh -- but the situation is not as extreme as these numbers make it sound. The subtle key word in that statistic is "liquid". "Liquid wealth" is cash, stocks and bonds, and the like. It does not include houses, cars, appliances, furniture, and other such assets.

Suppose person A owns a house worth $200,000 with no mortgage, a brand new $30,000 car bought with cash, a $50,000 boat, and tens of thousands in other assets, but has only $5,000 in the bank, while person B lives in an apartment and doesn't own a house, doesn't own a car but rides the bus, and in general has few material possessions, but he has $50,000 in the bank. Would you say that B is 10 times as rich as A, because only the cash counts as "wealth"?

Realistically, most people spend a considerable percentage of their income on things that are quickly consumed: food, gas for the car, electricity, etc. After that they use their money to buy things that they want to use in their daily life: houses and cars and furniture and the like. It's only after they have these things that they put substantial money into savings and investments. (I'd say most Americans put too little money into savings, but that's another story.)

So suppose you have two people. A has earned $500,000 so far in his life. Of this he has spent $200,000 on things he's consumed, $250,000 on durable assets like a house and car, and he has saved $50,000. B has earned $750,000. Of this he has spent $250,000 on things he's consumed, $300,000 on durable assets, and he's saved $200,000. So B earned 50% more money than A, but his liquid assets are 400% of A's. (I just made up those numbers, I'm not claiming they represent any actual case histories, but I think they're not implausible. There are people out there in these general ballparks.) Yes, B is richer than A, but counting just liquid assets exaggerates the difference wildly.

Brythan
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Mark Daniel Johansen
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4

We don't know

This claim is not based primarily on data but on interpolations of the underlying data. By interpolations, I mean that they look at actual data from one year or one country and then look at smaller clumps of data from a different year or country. They assume some level of proportionality and fill in values for the missing data.

Some quick examples. The Credit Suisse report on which the Oxfam claims are based makes claims about 2018. But the United States did not produce data for 2018. Its most recent report is 2016 (and apparently it produced reports every three years from 2007 to 2016). Andorra, Brazil, and Russia did not produce wealth distribution data at all. See tables 1-3 (sources) on pages 12-13 and 1-5 (data) on pages 15-16 of the 2018 Databook PDF. Or see the introduction on page 4 for a description of their estimation methods.

Sweden and Denmark each have only one or two sources of partial data. In the published year, we can say that the single richest household in Denmark had more wealth than at least 60% of the households in the same country. For Sweden, we can make the same claim about the richest adult and the poorest 60% of adults. Of course, we could also say that about a newborn baby, as the data shows that the poorest 60% in Sweden and Denmark in the years for which that statistic was reported had negative net worth in aggregate. From table 1-5.

It's interesting to compare Sweden and Denmark to the US by this measure. For the US, that was only true at the 30% mark. At 40% and above, the households had positive net worth (table 1-5 again). By this measure, the US had lower inequality than Sweden and Denmark in the measured years. This runs contrary to the normal perceptions of the three countries. I leave it up to you if this is because this statistic is flawed or if the normal perceptions are.

Brythan
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    Is this (the first couple of paragraphs, at least) falling for the Nirvana Fallacy? I have no doubt the data collected is not 100% and not perfect. I have no doubt that assumptions need to be made for economic modelling. But is there any reason to consider this model to be insufficient for the purpose? – Oddthinking Jun 25 '19 at 07:06
  • @Oddthinking I couldn't answer that without original research. For example, if we split the underlying data into two pieces, how well does one piece predict the other using their estimation method. What would that show? We don't know. My point here is simply that they are using estimation, but the claim doesn't show that. And, as I point out in the last paragraph, comparing the base data has odd results, which may mean that it is not equivalent. It's not just that the data is not 100%. They are basing the claim on something less than 50% of the underlying data. – Brythan Jun 25 '19 at 07:17
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    @Oddthinking I invite you to read page 4 of the Databook on their methodology. They make estimates from estimates, average over them and use correlations between their estimates to create estimates for wealth based on income. Some gems: "The best source of data for this purpose is household balance sheet data, which are now provided by 49 countries, although 25 of these countries cover only financial assets and debts. (...) The results are supplemented by econometric techniques, which generate estimates of the level of wealth in countries that lack direct information for one or more years." – sgf Jun 27 '19 at 11:52
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    "We use direct data on the distribution of wealth for 35 countries. Inspection of data for these countries suggests a relationship between wealth distribution and income distribution, which can be exploited in order to provide a rough estimate of wealth distribution for 133 other countries, which have data on income distribution but not on wealth ownership" – sgf Jun 27 '19 at 11:52
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    "The high skewness of wealth distributions makes sampling error important. Non-sampling error is also a problem due to differential responserates – above some level wealthier households are less likely to participate – and underreporting, especially of financial assets. (...) To compensate, wealthier households are over-sampled in an increasing number of surveys, such as the US Survey of Consumer Finances and similar surveys in Canada, Germany, Spain, and several other EU countries. – sgf Jun 27 '19 at 11:57
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    I don't doubt that Credit Suisse are doing the best they can given the data that they have, but taking those numbers and pretending there anything other than estimates (which can be useful for comparing statistics over years) shows, if it isn't just dishonest, a blatant ignorance of what statistics can and can't be used for. – sgf Jun 27 '19 at 11:58
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Do the 26 richest billionaires own as much wealth as the poorest 3.8 billion people?

Taking the question absolutely literally: No

This figure is based only on net worth. Specifically the net worth of multiple different people subtracting the debts owed by one person from the assets owed by completely different people.

So the people in question do own significantly more wealth than it claims.

Further: if Bob down the street owes a million dollars and has no assets his debt doesn't cancel out my own assets.

This figure is reached by not only looking at net value, it also adds up the net value of multiple people.

26 richest billionaires between them own 1.4 trillion.

top two-fifths of the 3.8 billion people referred to in the Oxfam stat. That’s 1.4 billion people; between them, they are worth $2.2 trillion.

So that group does have more wealth than the 26 richest billionaires

The oxfam report reaches it's number by subtracting the money owed by people like Jérôme Kerviel from that 2.2 trillion.

http://blogs.reuters.com/felix-salmon/2014/04/04/stop-adding-up-the-wealth-of-the-poor/

let’s look at just the top two-fifths of the 3.5 billion people referred to in the Oxfam stat. That’s 1.4 billion people; between them, they are worth $2.2 trillion. And they’re a subset of the 3.5 billion people who between them are worth $1.7 trillion.

The first lesson of this story is that it’s very easy, and rather misleading, to construct any statistic along the lines of “the top X people have the same amount of wealth as the bottom Y people”.

The second lesson of this story is broader: that when you’re talking about poor people, aggregating wealth is a silly and ultimately pointless exercise. Some poor people have modest savings; some poor people are deeply in debt; some poor people have nothing at all. (Also, some rich people are deeply in debt, which helps to throw off the statistics.)

...

How is it that the US can have 7.5% of the bottom decile, when it has only 0.21% of the second decile and 0.16% of the third? The answer: we’re talking about net worth, here: assets minus debts. And if you add up the net worth of the world’s bottom decile, it comes to minus a trillion dollars. The poorest people in the world, using the Credit Suisse methodology, aren’t in India or Pakistan or Bangladesh: they’re people like Jérôme Kerviel, who has a negative net worth of something in the region of $6 billion.

...

The result is that if you take the bottom 30% of the world’s population — the poorest 2 billion people in the world — their total aggregate net worth is not low, it’s not zero, it’s negative. To the tune of roughly half a trillion dollars. My niece, who just got her first 50 cents in pocket money, has more money than the poorest 2 billion people in the world combined.

Or at least she does if you really consider Jérôme Kerviel to be the poorest person in the world, and much poorer than anybody trying to get by on less than a dollar a day.

There is massive wealth inequality but the oxfam methodology is misleading and this claim as worded is technically false. A subset of people from the worlds poorest 3.8 billion do in fact control more wealth than the 26 richest billionaires

further:

wealth is not comparable to debt at a 1:1 rate. Bob and I could come to an agreement that he pays me 1 dollar and next week I'll owe him 100 trillion dollars, it would be meaningless beyond the total value of my net assets. Very little wealth would have been created or changed hands but by oxfams analysis I would then personally cancel out about half the worlds total wealth.

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Murphy
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    The problem here is you're choosing a different definition for the word "wealth" than was used in the original report. As usual with these types of debates, you're 100% right with one set of definitions, and 100% wrong with another set of definitions. The fact that you disagree about what core terms actually means makes any meaningful debate impossible. – barbecue Jun 26 '19 at 19:33
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    @barbecue their definition is insane. wealth is not comparable to debt at a 1:1 rate. You and I could come to an agreement that you pay me 1 dollar and next week I'll owe you 100 trillion dollars, it would be meaningless beyond the total value of my net assets. Very little wealth would have been created or changed hands but by oxfams analysis **I would then personally cancel out about half the worlds wealth**. it's perfectly reasonable to point out that the other sides definitions are crazy. if the sources of those definitions are in fact crazy then meaningful debate may be impossible. – Murphy Jun 27 '19 at 10:12
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    your counter-example is a reductio ad absurdum, which is a reasonable approach in deductive reasoning, but we're not dealing with deductive reasoning here. I read Oxfam's argument and I see merely an oversimplification, not insanity. – barbecue Jun 27 '19 at 14:08
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    @barbecue the insanity is that deciles 2-5 are populated by dirt farmers in the poorest countries in the world, but the *bottom* decile is populated by people from advanced democracies who happen to have student loans, be underwater on their car loan or mortgage, have credit card debt, **and billionaires hanging out at Davos with the 38, except they happen to be leveraged right now**. Negative equity is not a dirt-farmer problem, these do not belong with the others, ***and they distort the average to uselessness***. – Harper - Reinstate Monica Jun 27 '19 at 14:20
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    @harper accusing the opponent of insanity is a tactic, not a meaningful argument. – barbecue Jun 27 '19 at 14:23
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    @barbecue which I didn't. Declaring an argument invalid simply because it mentions a word is a tactic, not a meaningful argument. – Harper - Reinstate Monica Jun 27 '19 at 14:32
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    @harper did you or did you not use the word "insanity" to describe the opposing argument? Simply "mentioning a word" is not the same thing as using that word to describe something. I could simply mention the phrase "pedantic twit" but that doesn't mean I'm calling you a pedantic twit. On the other hand, if I did call you a pedantic twit, that would be an argumentum ad hominem, not a valid argument against your claim. Basically, you're saying that pointing out an ad hominem argument is itself a logical fallacy, which is pretty silly. – barbecue Jun 27 '19 at 15:34
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    @barbecue: calling someone a pedantic twit is *not* an argumentum ad hominem. Arguing that someone's position is invalid *because* they are a pedantic twit would be an argumentum ad hominem, but that's not what's happening here. Reasonably refuting someone's argument and then adding as an aside that the arguer is a pedantic twit may be impolite, but it's not a logical fallacy, and it's a little disingenuous to suggest that it is. – Crowman Jun 27 '19 at 15:45
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    Speaking of fallacies, let's not forget ignoring the core argument and creating a phony discussion about something else... "going meta" is a very safe/cheap/cowardly way to do that. *In the legal game we have a saying: When you have the facts on your side, argue the facts. When you have the law on your side, argue the law. When you have neither, just argue.* So I consider such behavior to be a concession-by-table-flip. – Harper - Reinstate Monica Jun 27 '19 at 15:59
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    @barbecue you seem mistaken about what argumentum ad hominem means. "xyz is wrong because [math and reasoning], it is also insane" isn't argumentum ad hominem. "xyz is wrong because it's insane" would be. – Murphy Jun 27 '19 at 16:33
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    @PaulGriffiths re-read what I actually wrote, not what Harper claims I wrote. – barbecue Jun 27 '19 at 16:59
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    @murphy you seem mistaken about what I've actually said. Seems to be a common problem here. Feel free to claim victory, you've successfully dragged me into a pedantic debate about pointless minutia while completely disregarding my original point, and I fell for it. Good on ya. – barbecue Jun 27 '19 at 17:03
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    @harper my original point was simply this: you cannot have a meaningful debate over whether or not X is true if you and your opponent do not agree on the definition of X. That's the one, single, only point I was making. – barbecue Jun 27 '19 at 17:09
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    The validity of an argument has nothing to do with the truth or falsity of the premises. Definitions are premises. If you don't agree on the premises, no amount of logically valid reasoning will lead you to agree on the conclusion. This is pretty basic stuff, not controversial at all, yet somehow by pointing it out Ive managed to punch a hornet's nest and generate a lot of hostility and personal attacks. – barbecue Jun 27 '19 at 17:15
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    @barbecue: Nobody's claiming you've done something you haven't. If someone asks, "is statement X true?", and the correct answer is, "only if you accept ludicrous premises", then the correct answer is also "no, statement X isn't true, regardless of the logical validity of the argument, because we don't accept ludicrous premises". Trying to maintain that you "cannot have a meaningful debate" about an argument unless you accept the ludicrous premises on which it is based is silly. Just accept the correction and move on. – Crowman Jun 27 '19 at 17:38
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    I didn't make much in the way of claims about what Murphy wrote, except in the extreme: I claim his words are fallacy, and I claim he *table-flip quit* at message 5 by quintupling-down on an error in message 3. Obviously he disagrees. It seems clear to me that the writers of "insane/ity" *actually intend* a Feynmanian "not even wrong", and expected the reader to infer that. – Harper - Reinstate Monica Jun 27 '19 at 17:41
  • @PaulGriffiths Respectfully I disagree with your assessment and BARBECUE is correct. Literally one of the basic ideas in Logic 101 is the idea of premises/definitions versus logical validity of an argument. The truth value of statements is separate from the validity of an argument. The form of an argument determines validity, whereas the value and premises added with it determine truth value. Therefore, when he says "comparing arguments with different premises is not logical" (same topic), he's correct. Different premises mean potentially different truth values, regardless of argument. – RoboBear Jul 03 '19 at 17:11
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    @RoboBear: And that's really great, but unfortunately this isn't a question about the logical validity of an argument - it's a question about whether a particular claim is true, so your comment is a bit of a red herring. – Crowman Jul 03 '19 at 18:29
  • Whether or not someone is using the same definition of wealth is a pretty valid point to the original discussion. You might as well write a different report if you want to consider wealth differently. Just look at people debating the validity of considering debt as part of wealth. The original question was "how does the set or premises affect the truth of an argument and the argument itself" and the answer is "it leads to different conclusions". It is a correct statement to say if you use a different definition of wealth, you will probably reach different conclusions than the report. – RoboBear Jul 03 '19 at 18:41
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    @RoboBear: "it is a correct statement to say if you use a different definition of wealth, you will probably reach different conclusions than the report" - yes, that's clearly the entire point of the question. If using reasonable and appropriate definitions and premises will result in different conclusions than the report on this matter, then the report is misleading and the quoted claim is false, regardless of how "logically valid" the report's arguments may be. – Crowman Jul 03 '19 at 19:40
  • @PaulGriffiths Not quite. You're misconstruing what I'm saying. There's no such thing as "(perfectly) reasonable and appropriate definitions and premises" -- the entire choice of what of these is or is not appropriate is an open question in much of Applied Mathematics. You need to provide evidence and argument to support one choice over another. The purpose of validity is to determine "Given the premises listed, are the argument and conclusions correct?" In short - we're discussing both the report and the scientific method. If the premises are wrong, the report is not wrong; it's biased. – RoboBear Jul 03 '19 at 21:09
  • But most reports and "facts" and studies are biased. In this case, I think you should elaborate why considering debt as part of wealth for any individual is "unreasonable". If you don't do so, how would you consider debt in your own version of this report? Or would you totally ignore debt? – RoboBear Jul 03 '19 at 21:11
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    @RoboBear: I haven't presented any view on the report or on the reasonability of its premises at all. What gives you the impression that I have? As for "you need to provide evidence and argument to support one choice over another", this is again exactly what the original question is asking for, and exactly what you previously claimed to be impossible without accepting the premises of the report. Are you now retracting that claim? – Crowman Jul 03 '19 at 21:47
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    @RoboBear I did elaborate on exactly why the premise is utterly unreasonable. I explained clearly why the definition is cloud-cuckoo-land-crazy. You and I could come to an agreement that you pay me 1 dollar and next week I'll owe you 250 trillion dollars. By the "logic" of this report the world would then have **less than zero total wealth** at which point I could point to any individual except myself and say "this person controls more wealth than every other human combined. That would not be a helpful or informative statement: much like Oxfams report. – Murphy Jul 04 '19 at 09:50
  • I see now, yes, you're right, you did explain. However, I think it’s more accurate to say the model is incomplete than its premise(s) are invalid because they clearly explain their model and methods. The Credit Suisse report data explains its use of different data to "assign individuals to their corresponding wealth position" and defines net worth as assets minus debts, if the debt can be assigned to an individual. They also ignore children and specify they're combining estimates of household wealth across countries with patterns of distribution of wealth within countries. – RoboBear Jul 09 '19 at 17:40
  • Basically they're estimating a relative "net worth score" for every individual compared to all adults in the world within each region, and there is no reason a net worth cannot be negative. If anything, I think the model just doesn’t go far enough — for example, they don’t consider credit or education/skills or earning potential or income, just wealth in a snapshot. Most people that are not rich probably care more about earning potential and credit/debt ratio than they do a complex net wealth estimation. – RoboBear Jul 09 '19 at 17:40