TIME Economy

5 Stats That Explain the Super Wealthy

The Davos World Economic Forum 2015
Jason Alden—Bloomberg/Getty Images Aliko Dangote, billionaire and chief executive officer of Dangote Group, pauses during a session on day two of the World Economic Forum (WEF) in Davos, Switzerland, Jan. 22, 2015.

From Nigerian billionaires to Russian oligarchs, numbers that explain how wealth works in politics

The world will always be divided into “the haves and the have nots,” but lately seems the ‘haves’ are capturing more and more of the world’s wealth. Yet, even the super wealthy are feeling the impact of political turmoil. Here are five stats that explore the plight—and flight—of the world’s richest.

1. Nigeria’s super rich

For a country that relies on oil for almost 70% of state revenue, crashing prices spell trouble. The stock index dropped 40% in 2014, while the currency has lost a fifth of its value over the last six months. But the person who has been hit hardest is the person who can most afford it. Africa’s richest man, Aliko Dangote, earned Forbes’ “Biggest Loser” title—his wealth has fallen the most of anyone on earth in dollar terms. Yet he still has a $14.7 billion fortune and his companies account for a quarter of the market capitalization of the Lagos stock market. Even as youth unemployment and corruption remain staggeringly pervasive, economic growth has enriched the country’s elites. Nigeria’s population of high net worth individuals grew 44% between 2007 and 2013.

(Forbes, Forbes, Financial Times, New World Wealth)

2. Oil prices and sanctions hit Russia

Russia has also been battered by tanking oil prices, and sanctions have had an outsized impact on Russia’s wealthiest and those closest to Vladimir Putin (who are often one and the same). The country lost the most billionaires in 2014, down to 88 from 111. Between February and December of 2014, the combined wealth of the country’s 20 richest people shrank by 30%. In other words, .0000001% of Russia’s population lost $73 billion—a sum on par with the annual GDP of neighboring Belarus. It’s no wonder India overtook Russia for third place on the billionaires list last year.

(Forbes, Forbes, CNBC, Wall Street Journal, World Bank)

3. The millionaire exodus

Millionaires have been voting with their feet. Between 2003 and 2013, 76,200 Chinese millionaires emigrated, representing 15% of China’s total and the largest exodus of millionaires of any country. Over the same span, 27% of Indian millionaires, some 43,400 people, left as well. In third place, France saw 13% of its millionaire population leave, perhaps due to what they viewed as excessive taxation on the wealthiest. Russia came fifth in sheer number of departing millionaires; they accounted for 17% of Russia’s millionaire population. Where are they all heading? Mainly the UK, the U.S., Australia and Singapore. The number of UK fast-track or Tier 1 visas (which require a $3 million investment in British assets) provided to Russians increased nearly 70% last year.

(CNBC, Business Insider, Bloomberg)

4. Billionaire cities

A few years ago, New York surpassed Moscow as the top city by billionaire population. Hong Kong, London, and Beijing round out the rest of the top five. Yet, unlike Moscow, where 80% of Russia’s billionaires reside, New York has less than a sixth of America’s. The United States spreads the wealth: 11 U.S. cities have 11 or more billionaires. California itself has 131—if it were a country, it would have more billionaires than any country except the U.S. and China.

(Forbes, Knight Frank, Forbes)

5. Big money in Chinese politics

While many of China’s wealthiest may have left the country, there are plenty who still fill the highest ranks of government. More than one in seven of the 1,271 richest Chinese are serving in Parliament or its advisory body. These 203 delegates are collectively worth over $460 billion. For some perspective, the richest representative in the U.S. government would be the 166th richest member of China’s government. Even as Chinese leader Xi Jinping clamps down on corruption and pressures elites to rein in their extravagance, China’s wealthy are still spending. Chinese now represent nearly a third of the world’s luxury sales, although roughly two-thirds of these sales take place outside the country.

(CNBC, New York Times, NBC News)

MONEY Wealth

These Are the World’s Most Expensive Cities

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MONEY road to wealth

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Meet Nick Walter, a programmer who makes a living seated at his kitchen table.

MONEY Wealth

The Super-Rich Have a Racial Wealth Gap, Too

Even at the top end of the economic scale, the financial differences between black and white Americans are big — and they've changed little in 30 years.

MONEY Love and Money

What Fifty Shades Gets Wrong About Money and Sex

FIFTY SHADES OF GREY
Chuck Zlotnick—Focus Features/Courtesy Everett Collection

The hit novel turned film suggests wealth makes men sexy to women. That's misleading.

Does money make men more attractive to women? On the surface, both popular culture and social science research seem to say yes.

You can’t take a step into the academic literature without tripping over a study showing that women place higher value than men on a partner’s wealth, that women are more attracted to men with nice cars, or that women orgasm more with rich partners.

The standard social science explanation for this phenomenon gets expressed in evolutionary terms: Because impregnating as many women as possible gives a man’s genes an evolutionary advantage, men are more superficial and promiscuous. Conversely, because of the time and energy required for a single pregnancy, women are choosier and more preoccupied with finding a mate rich with resources to provide for offspring. Or, at least, that’s the theory.

The success of the Fifty Shades of Grey franchise certainly does little to dispel all this. The story—for those living under a rock—details the sexual awakening of a young woman seduced by a billionaire, whose physical attractiveness is matched only by his fleet of luxury cars, helicopter, penthouse apartment, and cushy CEO job running his own company. In other words, as author E.L. James has put it, Christian Grey is “every woman’s dream.”

“He’s very good looking, he’s very good at sex, he’s disgustingly rich,” she told TIME.

To be fair, it’s intuitive that a partner with means is more desirable than one without, all else being equal. A recent poll found that 78% of coupled Americans of both sexes say they’d prefer a partner who is good with money over one who’s physically attractive. And if you are a man who feels pressure to impress women with your money, or a woman who felt titillated reading about Christian Grey’s alpha status, you probably buy into the theory without even realizing it.

But as it turns out, this popular narrative about men, women, sex, and money isn’t all it’s cracked up to be.

A recent study has found that the common depiction of women primarily seeking out rich and powerful men (and men seeking out young and attractive women) is fairly uncommon in practice and—crucially—doesn’t reflect the reality of successful relationships or what actually makes people happy.

The research, by University of Notre Dame sociologist Elizabeth McClintock, has found that gender differences more or less disappear when you discard self-reported attraction scores and instead examine how real couples pursue one another, date, and settle down. In reality, rich women are just as likely as rich men to use their status to snag a more-attractive mate. And across the board, relationships in which people are essentially trading status for sex tend to be uncommon and short-lived.

Instead, McClintock found that the biggest force that predicts a successful match between people is actually how well all of your qualities match up. That means, for example, that people of similar physical appeal tend to pair off, and those with comparable educations and financial means are drawn together.

What’s perhaps counterintuitive, then, is that a woman seeking a rich man is actually better off getting herself a raise than a makeover. Likewise, a man seeking an attractive lady will see higher returns investing in a gym membership than a brokerage account.

So why does the tale of the rich, experienced man seducing the pretty ingenue persist in popular imagination, not to mention the academic literature? McClintock found that many existing studies took for granted the very gender roles they were supposed to be measuring, examining only women’s attractiveness and men’s status or money, while ignoring men’s appearance and the wealth and education of women.

As Northwestern University psychologist Eli Finkel told New York magazine: “Scientists are humans, too, and we can be inadvertently blinded by beliefs about how the world works.”

Indeed, we’re all better off disposing of our blindfolds—even if they’re made of the finest satin.

 

TIME Innovation

Five Best Ideas of the Day: February 20

The Aspen Institute is an educational and policy studies organization based in Washington, D.C.

1. Hollywood’s diversity problem goes beyond “Selma.” Asian and Latino stories and faces are missing.

By Jose Antonio Vargas and Janet Yang in the Los Angeles Times

2. Shifting the narrative away from religion is key to defeating ISIS.

By Dean Obeidallah in the Daily Beast

3. Innovation alone won’t fix social problems.

By Amanda Moore McBride and Eric Mlyn in the Chronicle of Higher Education

4. When the Ebola epidemic closed schools in Sierra Leone, radio stepped in to fill the void.

By Linda Poon at National Public Radio

5. The racial wealth gap we hardly talk about? Retirement.

By Jonnelle Marte in the Washington Post

The Aspen Institute is an educational and policy studies organization based in Washington, D.C.

TIME Ideas hosts the world's leading voices, providing commentary and expertise on the most compelling events in news, society, and culture. We welcome outside contributions. To submit a piece, email ideas@time.com.

TIME Food & Drink

This Caviar May Be the Most Expensive Food in the World

At $114,000 a kilo, this dish is not for everyone

A fish farmer in Austria is offering a caviar dish that he says is worth $114,000 per kilo.

The white caviar “Strottarga Bianco” concoction includes rare albino sturgeon dried roe sprinkled with gold leaf, according to the website for Walter Gruell’s fish farm. The dish is only available on customer order.

“It is certainly not a product for everyone, but there is definitely a market for extremely exclusive products especially when they are something new,” said Gruell’s son Patrick, who helped develop the caviar, according to Yahoo News.

According to the Guinness World Records, the most expensive food on record is also a caviar: Almas, from the Iranian Beluga fish, sells for roughly $35,000 per kilogram.

TIME White House

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Watch the video above to see which presidents brought the most green to the White House.

TIME Research

There’s a Growing Health Gap Between Rich and Poor Teens

International efforts to improve health for the under-5-year-olds are not being matched for older children, a new study reveals

Disparities in health between rich and poor adolescents grew globally during the first decade of this century, according to a survey conducted in 34 countries in Europe and North America.

The study, published in the Lancet, reports that “socioeconomic differences across multiple areas of adolescent mental and physical health increased between 2002 and 2010.”

According to the research, adolescents from the most impoverished socioeconomic groups are more likely to suffer from poor health thanks to diminished physical activity and larger body mass indices.

“A strong international focus on reducing child poverty and mortality in children under five years has not been matched by a similar response in older age groups, resulting in widening socioeconomic inequalities in adolescent health,” says Frank Elgar, a psychiatry professor at McGill University in Montreal.

Researchers behind the study relied on data compiled from 500,000 young people from across Europe and North America who participated in a World Health Organization survey.

[Science Daily]

TIME Davos

What Obama and Davos Plutocrats Have in Common

A logo sits on a glass panel inside the venue of the World Economic Forum (WEF) in Davos, Switzerland on Jan. 19, 2015.
Chris Ratcliffe/Bloomberg—Getty Images A logo sits on a glass panel inside the venue of the World Economic Forum (WEF) in Davos, Switzerland on Jan. 19, 2015.

Global wealth has changed dramatically. It's time our tax code should, too

If President Obama’s State of the Union speech Tuesday night and the chatter at the World Economic Forum in Davos, which opened Wednesday, are any indication, inequality will be the hot economic topic for another year running.

The president’s proposals for changes to parts of the US tax code that mainly benefit the wealthy revives the conversation Warren Buffett started a few years back with his op-ed about why his secretary pays a higher tax rate than he does. (Answer: She works for wages, whereas the Oracle of Omaha earns money on money itself, in the form of capital gains, interest income, etc.) At the WEF in Davos, where world leaders meet every year to hash out the big geopolitical and economic issues of the day, one of the most talked about reports is Oxfam’s new brief looking at how the 85 richest people on the planet have the same amount of wealth as the poorest 50%, a huge jump from last year when it took a full 388 plutocrats to equal that wealth. Some 20% of the billionaires come from the world of finance and insurance, a group whose wealth increased by 11 % in the last twelve months. And $550 million of it was spent lobbying policy makers in places like Washington, something Oxfam believes has been a major barrier to tax and intellectual property reform that creates a fairer economic system.

Plenty of those plutocrats are here on the Magic Mountain, and some are undoubtedly checking in with their tax planners. I expect that we’ll hear lots more in Davos this week about how to restructure tax codes for the 21st century, mainly because the nature of wealth and how it gets created has changed so dramatically. Today, more than ever since the Gilded Age, money begets money; income earned from wages has been stagnating for years, or decades even, depending on which type of workers you tally. Meanwhile, changes in the tax code and corporate compensation over the last 30 years or so has concentrated more financial resources at the very top of the socio-economic food chain. Indeed, financial assets (stocks, bonds, and such) are the dominant form of wealth for the top 0.1 %, which actually creates a snowball effect of inequality.

As French economist Thomas Piketty explained so thoroughly in his now famous 693 page tome on wealth inequality, Capital in the 21st Century, the returns on financial assets greatly out-weigh those from income earned the old-fashioned way—by working for wages. Even when you consider the salaries of the modern economy’s super-managers—the CEOs, bankers, accountants, agents, consultants and lawyers that groups like Occupy Wall Street railed against—it’s important to remember that somewhere between 30% to 80 % of their incomes are awarded not in cash but in stock options and stock equity. This type of income is taxed at a much lower rate than what most of us pay on the money we receive in our regular checks. That means the composition of super-manager pay has the booster-rocket effect of lowering taxes (and thus governments’ ability to provide support for the poor and middle classes) while increasing inequality in the economy as a whole.

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It’s a cycle that spins faster and faster as executives paid in stock make short-term business decisions that might undermine long-term growth in their companies even as they raise the value of their own options in the near. It’s no accident that corporate stock buybacks, which tend to bolster share prices but not underlying growth (you know, the kind that creates jobs for you and me), and corporate pay have gone up concurrently over the last four decades. There are any number of studies that illustrate the intersection between the markets, our tax system, and wealth gap; one of the most striking was done by economists James Galbraith and Travis Hale, who showed how during the late 1990s, changing income inequality tracked the go-go NASDAQ stock index to a remarkable degree.

As Piketty’s work shows, in the absence of some change-making event, like a war or a Great Depression that destroys financial asset value, the rich really do get richer–a lot richer–while the rest of us become relatively worse off. One of the few levers that governments have to combat this trend is the tax code. While Piketty argues for a global wealth tax, something that will likely never happen, President Obama’s stab at capital gains taxes and trust taxes is probably just the opening round in a tax debate that will go on throughout this year, and into the 2016 presidential race.

I say, bring it on—given that the nature of wealth has changed, it’s high time the tax system should too.

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