This does not hold because wealth is not normally distributed. It may be lognormal; depending on its skew, you can end up with very different results.
Aside from the issue of nonnormality (which is huge), this doesn’t capture the difference you notice between your own wealth and that of the people you see on TV.
Fair points, y’all–I’m very much a dabbler in statistics. I like the general idea of capturing the “feel” of wealth, which is that folks in the very middle don’t feel a straight arithmetic distance from others. I’m not sure if I’m saying that clearly; do y’all know what I mean? How could you capture that perception?
Could it be something related to “how long could you go without your primary source of income?”
Anecdotally, I’m fine, by no means well off, but comfortable.
If I got laid off today I would start to get nervous immediately, go into crisis mode in 60 days (ie take any job that would have me), and rely on the kindness of friends’ [couches] in 90 - 120 days.
So: “comfortable” to “asking for hand-outs” in 4 months.
Is that what you’re driving at?
There are certainly variations on ‘rich’, but frankly I think that too many people kid themselves into believing that they’re not rich because, well, the grass is always greener. It’s easy to think that, “gee, I’m just one of the working stiffs, just like everyone else,” except that in fact the concerns and pleasures of a household making $200,000 a year are so far from those of a household making $60,000 a year as to be laughable.
And, as to the idea that the richness of a person is relative to his or her location, I can’t buy that either. Yes, to live in Manhattan might be really expensive, and so you might need a much larger income to afford the rent/tax/whatever. All that means is that you are rich enough to live in Manhattan, not that you are poor or middle class because your rent is so high.
According to EnderW24:
Think about that. Half of all families in the USA earn 50,000 dollars a year or less. If your family earns, say, four times that, and you don’t think you’re rich, you’re out of touch.
Rich is less about how far you are from the wealthiest you could be and more about how far you are above every most of the other poor schlubs trying to make it in this world.
Rich to me is being able to pay ALL my taxes and bills and utilities from the interest from my investments without having to work. Also all the money I would need to enjoy life. So, my idea of rich would be a LOT less money then what I’ve been reading here. When I retire my idea of enjoyment is reading books in the backyard and walk along the river with a couple week car vacation thrown in. I could handle that for a few decades. 
I think that discussing the meaning of a word in the abstract (ie, not for any identifiable purpose) is an exceedingly unuseful exercise.
And that’s why its relative. Rand is getting crap because he has admitted to making more than five times that - but people are saying that isn’t rich. And it isn’t “yacht, villa in the South of France, buy your suits from an Armani salesman who knows your name, collect French Impressionist paintings as a hobby” rich.
Half of the world makes less than $7k. So if you are making five times that - $35k - are you out of touch if you don’t believe you are rich? Is there anyone that would argue that $35k is rich - EXCEPT relative to the rest of the world?
I disagree with definitions of “rich” that would make it so narrow as to apply to almost nobody.
I think the word “rich” is like the word “tall”. There is a subjective aspect to it, but also undeniable boundaries of pure fact. I am 6 foot, almost exactly (if I stop slouching, maybe another half inch). To someone who is 5’8’’, I am tall. To someone who is 6’4’’, I am not particularly tall. And that 6’4’’ guy might not feel so tall if he hangs around with professional basketball players.
And yet by any reasonable definition, someone 6’4’’ tall is tall. Subjectivity only goes so far. I think someone who makes, say, $250,000+ a year and doesn’t consider themselves rich because they can’t buy a Picasso is like someone who’s 6’6’’ and doesn’t consider themselves tall because they can’t dunk a basketball with both feet still on the ground. People of similar incomes tend to group together socially, so the person making $250,000+ a year is like the 6’6’’ hanging out with a basketball team. They’re still rich and tall, respectively, but it’s easy for them to forget that fact.
Yup - roughly my definition as well. It results in not having to work, and enjoying an upper-middle class life style. Rich is not wealthy… to be wealthy I think you need 3-4 times that amount.
Here’s a few of purposes off the top of my head.
- Sociological theorizing
- Public policy
- Self-identification
I am sure others can think of more. It’s not that hard.
In that case, what is the word for those people?
When people say you can’t be rich if you work and support yourself off your income, I think they are for some reason or another lapsing out of their normal ability to understand how humans tend to think.
Aside from people who were born into serious money, people rich or poor started out young and varyingly poorly paid and worked their way to more and more money. There’s a lot of inertia in that. So imagine you’re 40 and live outside the most expensive cities and have managed to save $10mm. According to the “do you have to work to support yourself” test, you’d ask yourself if you want to quit and live off your savings just because it’s tenable. But I don’t know anybody at 40 who is constantly doing the math to see if they can retire. If anything, you might say “well, I’ve got a really nice nest egg and I’m always stressed and don’t see my family a lot so maybe I’ll look into becoming an adjunct at the local college or something else lower stress and lower pay”. Actually completely retiring just because you can though? It’s not what most people want for their youthful days.
Of course, if you managed to save millions you’re much more likely to retire at 50 rather than work to 65.
So I think the idea that “if you have to work you’re not rich” really confuses the fact that many rich (and poor) people want to work and it’s not an easy call to say they ‘have’ to. I mean, aside from my modest example above, there are people in their 70s making $50,000,000 a year running fortune 500 companies. Clearly they don’t fit the definition of ‘have to work’ but they actually want to for some reason.
As I stated in the other thread, your annual income in my opinion has little bearing on ‘rich’. If you make $250k and spend $249k of it can you really call yourself rich? Seems to me like you are just getting by since you still have to work to have the money needed to support your lifestyle.
Your net worth and what you can draw against that nest egg is one measure that defines where you are on the rich scale, but it only one measure. I think how you choose to live your life is another measure. Being able to buy expensive things seems like a silly way to define rich to me. Having the financial freedom to live your life on your own terms seems a better measure to me.
What level you are comfortable living your life at, is one aspect that makes it such a variable number. If you can draw $40k and where you choose to live and how you choose to live makes you happy, then I would argue that you are rich. If you need $200k a year to live your life the way you want, the clearly you will need more networth. But truly which person is happier? The amount is such a variable and all that is needed is the amount needed to live ‘your’ lifestyle without worrying about money.
Warren Buffet doesn’t own an expensive house or car yet he is comfortably rich we can all agree right? Anything above what he needs to live his life year to year is just excess but really doesn’t impact his life. So if you are very happy with your life and environments at $40k then you are as rich as Warren it seems to me.
So for me rich is defined as the amount of money you have in your networth that allows you to draw against it on a yearly basis without having to worry about running out of money or working. That number will be variable due to how differently people live their lives.
No, it doesn’t–sorry! For me this just gets back to the idea that being rich is tied into whether you have to work. The idle rich are one subset of the rich, just like the idle poor are one subset of the poor; there are also the working rich and the working poor. But for that to make any sense, there has to be a definition of “rich” that isn’t tied to income.
In The Blank Slate, Stephen Pinker cites a study showing that folks perceive their own wealth relative to the society they’re in. Someone who earns $2 a day who lives in a region where the median income is $1 a day will rank themselves richer than someone who earns $100 a day in a region where the median income is $200 a day, in other words. That’s why you have to consider things according to location, and why it makes sense to judge richness in relative, rather than absolute, terms.
And yeah, you have to be rich to live in some cities. The median income in those cities tends to be much higher than in other places. I remember in college reading about checkout clerks in San Francisco who earned a starting wage of $15 an hour; for this North Carolina boy who’d applied for $5.50 jobs, that sounded like the lap of luxury. I didn’t realize at the time how much more expensive San Francisco was than Durham. This website compares the cost of living in different places.
I’m not sure it’s sensible to judge someone who lives in a tiny cramped $2500 studio in San Francisco, eating ramen and riding the subway to a dead-end job, as richer than someone who lives in a decent $1000 apartment in Durham, eating good food and driving their own car, simply because the SF person earns more money. I think you need to see how far that money goes–and according to that calculator, the Durham person would need a 74% raise in order to afford the same standard of living in SF.
When you have enough in capital that you can invest it in safe investments and, after reinvesting for inflation, still have at least 100k a year in income.
Rich to me means you don’t have to work for a living, you can live off of investments. Its probably a dumb assumption, but it is the one I have.
I’m guessing 3 million in assets would provide enough income to provide 100k a year and still keep up with inflation.
To my mind it isn’t whether you work, but rather whether you rely on what could be described as a “salary”. Subject to some very unusual examples like famous actors and athletes, there seems to me a functional difference between those who punch a clock (or take down dockets) and those who earn from what they own.
It isn’t that the rich are necessarily “idle”. Investing wisely and making business decisions is work, it just isn’t earning, as it were, from one’s own hands at a trade.
I’m not a fan of the quintiles method. A definition that pegs objectively “rich” at US $88K per year (subject to local deviations) strikes me as intuitively incorrect. That’s less than a skilled mechanic working in a factory can make in southern Ontario (my brother in law is one).
If you have to tell people what you make in order to feel good about yourself or belittle others on a message board, you aren’t rich.
Which people? The Bill Gates and Saudi oil prince crowd? The word “rich” applies to them as well; I don’t know of a single word that applies only to them. I’d probably refer to them as “ultra-rich”, or “mega-rich”, or something like that. If we’re talking about the Bill Gates level of wealth specifically, I might opt for terms like “the richest people in the world” for emphasis.
I mean, what do you call someone who’s 7’6’’? Well, they’re tall. They are also very tall, or super tall. I don’t know if we need a specific word just for them.
I’d agree with this with one important modification - the $249k of it has to be spent on necessities. If you can’t live in your area on less than $249k, and can’t realistically leave for a cheaper area, then I don’t think that’s rich. But if you make $250k and only spend, say, $200k on necessities, then you are rich. The $50k you’d have available to spend on non-essentials is the same as the median American household makes in an entire year - and Americans are a very rich people, by world standards.
I think a lot of Americans resist being classified as anything other than Middle Class – you naturally want to think of yourself as ‘normal’, not as being lower class (only inbred trailer trash are lower class, I’m lower middle class) or upper class (I’m not some hoity-toity Rothschild, I just take trips to Europe for the summer, so I’m upper middle class). And from my point-of-view, that results in ridiculous things like trying to classify yourself as Upper Middle Upper Class, or Lower Upper Middle Class, just anything to stay within that magical Middle Class label. I’ve been seeing a lot of it in lindsaybluth’s thread, as people insist that just because their parents belonged to a country club and have a second home in Florida just makes you Middle Class. Really? To me, Middle Class is your parents being able to send you to summer camp, not Paris, for a summer.