As the title asks.
A friend of mine is wondering about this. I thought I’d take it to the dope for him.
It might be good to have two separate figures–one for intra-familial inheritance, and one for inheritance in general. I’m not sure if he’s thinking specifically of the former, or more generally of the latter.
You may find this interesting:
http://blogs.wsj.com/wealth/2008/01/14/the-decline-of-inherited-money/
The article basically concludes from this that inheritance is not the main driver of today’s wealth.
But how many of the people who have “made” large amounts of money themselves (from investments, or whatever) were only able to get started because they inherited enough to get them securely started in their business career? Generally speaking, it is a lot easier for someone who starts out rich to get richer (sometimes a lot richer) than it is for someone who starts out poor to get rich.
Therefore a simple comparison of how much of people’s wealth has actually been inherited to the amount that has been “earned” during their lifetime underestimates the importance of inheritance to the distribution of wealth.
First, for point 2, no matter how many advantages they got from their family, how many people would willingly cite ‘inheritance’ as their source of wealth? I’m pretty sure there exists at least one rich person who honestly admits they were lucky and maybe didn’t deserve it, but I’m not sure there’s more than one.
Second, there’s a difference between the amount of cash directly inherited upon a relative’s death, and the total amount of advantage gained from one’s family. I mean, George W Bush probably hasn’t inherited much cash in the strictest sense, but there’s little doubt that he would be much much much less wealthy if he’d had a different last name.
If you want to avoid having to decide exactly what counts as ‘inherited wealth’, you could look at what’s called ‘intergenerational mobility’, which just looks at to what extent rich people tend to be children of other rich people.
I think the first response accurately answered the question. However, I do agree that there is a little more it that that. I am guessing that the majority of those with very large net worth that did not inherit a vast sum of money were able to utilize opportunities that others were not able to.
I do not know much about the founding of Microsoft, but Bill Gates Sr. was a successful lawyer. I am sure Bill Gates Jr. could have easily walked up to him and asked for a $20,000 loan to help get his business off the ground, and that loan could make all the difference. If you grew up in the ghetto, that is not something you can ask your father.
Check the stories of the Forbes 400. Go to www.forbes.com and scroll to the bottom.
While many members were at least middle class, many started with very little. Others, perhaps an education and intelligence were more important than wealth.
I would dare say that most very wealthy people transfer a substantial portion of their wealth by various means to their heirs before they die. This wealth would not be inherited wealth.
In addition there is a huge accounting issue lurking in the background. Suppose I inherit $1 million at age 25 and earn $100,000 every year in salary spending it all every year so I still have $1 million in savings. When I’m 35 I could claim either that I spent my inheritance and that I earned every penny of the entire $1 million I have or that all of my wealth is inherited, or anything in between. Afterall who is to say which dollars I actually spent.
Normally such monies are commingled, and I doubt you could make such a claim with a straight face.
I think the OP is really looking for % of wealthy people who got a significant boost from their family to launch their own success. Bill Gates would be such an example. I’d bet there are not a lot of Thomas Edison success stories amongst the current wealthy elite. They’re just good as hiding and passing the money along, occasionally bankrolling further successes. Many have deep enough family pockets that they can afford early setbacks and they persevere; others without that resource whither away.