Wednesday, 24 January 2018

Wealth inequality and Oxfam, again

Every year, Credit Suisse puts out its new databook measuring global wealth. And, like clockwork, Oxfam follows it up a few months later with calls to liquidate the wealthy.

Here follow some fun facts from the Credit Suisse report that provides the data that forms the basis for the Oxfam stuff.

At the end of 2000, New Zealand had 0.1 percent of the world's adults and 0.2% of the world's wealth. Mean wealth per Kiwi adult was USD $67,275; median Kiwi wealth was $30,078. By comparison, the global median wealth per adult in 2000 was $1,867.

By mid-2017, New Zealand still had only 0.1% of the world's adults but had managed to scrounge up 0.4% of the world's wealth: wealth per NZ adult rose to USD $337,441 and median wealth per adult rose to $147,593. Meanwhile, global median wealth per adult rose to $3,582.

Mean Kiwi wealth is five times higher than it was in 2000; median Kiwi wealth is 4.9 times higher. Global average wealth grew 1.8 times over the period and global median wealth grew 1.9 times.

Pretty clearly, Kiwis are doing something to steal wealth from the rest of the world. Because that's the only plausible reason that one person's wealth grows more quickly than another's, right? If Kiwis' wealth had kept pace with international norms, which are presumably fair, New Zealand's median wealth would be $57,750, not $147,593. The median Kiwi has almost $90,000 that should rightly have been shared around to poorer people internationally. And if mean wealth had tracked international norms, average wealth per adult would be about $120,000, not $337,000. Tracked across the 3.4 million adults in New Zealand, that's $735 billion dollars of unfair Kiwi wealth. The couple billionaires that are the focus of Oxfam's Five-Minutes Hate (NZ edition) have about eleven billion between them.

Okay, enough snark, though it is fun. Back to Credit Suisse.

NZ enjoyed the world's fourth highest percentage increase in total household wealth from 2016 to 2017, and the sixth highest in per-adult terms. In total, NZ households are $132 billion dollars richer than they were last year.

As for distribution, NZ's wealth gini is reported at 72.3. The median country's gini is 71 and the mean country's gini is 69.8. If you pull the pdf into an Excel table and sort by wealth gini... actually no. Here it is in a Google Sheet so you can check for yourself.

Anyway, New Zealand winds up being the 80th most unequal country in the world, or the 92nd most equal - on the Gini measure. Pretty middling. The world's most unequal country is Venezuela. After that, and in order, it's Kazakhstan, Egypt, Namibia, Ukraine, South Africa, United Arab Emirates, Bahrain, the US, the Bahamas, Hong Kong, and Thailand. Sweden is the 17th most unequal country on this measure. Germany is 42nd, followed by China at 43th. You have to go past Canada at 71st and the UK at 72nd and the Netherlands at 75th before you get to New Zealand at 80th most unequal.

And Myanmar, where 99.3% of the population has less than $10,000 USD in wealth, is the most equal, with a Gini of only 31.

The plot below is surely too small to read, but the hover-overs might work. If not, hit the link to the Google Sheet above.

New Zealand is a wealthy place. 1,971,000 adults have over USD $100,000 in wealth. Forget per capita stuff: that puts us, in sheer numbers, as having the 26th highest number of people with wealth over $100,000. We also have 201,000 people with more than USD $1,000,000 in wealth - a lot of Auckland houses, if owned mortgage-free, would put you in that tier. 

The wealth decile tables are even more interesting. They sort the world by wealth, split it into deciles. Then they report what fraction of the world's (say) bottom decile live in each country. New Zealand has only a tiny fraction of the world's population, but we have 0.1% of those living in the global bottom decile. Why? You can borrow money for education in New Zealand, resulting in negative measured wealth, making you less wealthy, on paper, than someone living debt free on $1.90 per day - and less wealthy than any newborn. At Table 6-5, we see that New Zealand's bottom decile's share of New Zealand's wealth is negative.

At Table 6-1, we find that New Zealand has 2.1 million people who are in the global Top 10%. And remember that their data's on New Zealand's 3.4 million adults.* So the median adult in New Zealand (again - half have more, half have less) is easily in the global Top 10% by wealth. And 301,000 are also in the Global Top 1%.

If we look at the fraction of wealth held by the top 1% in New Zealand, it shows up at 23.8%. Is that high? They provide that data for a set of 39 countries. Among that set, the fraction of wealth held by New Zealand's top 1% is the world's ninth lowest. The top 1% in New Zealand have a smaller fraction of national wealth than the top 1% in the UK, Spain, Canada, Greece, Romania, Korea, Norway, Finland, Germany, Ireland, Denmark, Singapore, Israel, the US, Poland, South Africa, Sweden, India and more. Did I say Sweden? Yes. Sweden's top 1% own 41.9% of Sweden's wealth.

If you look at the top 5% instead, New Zealand's got the 9th lowest again. If you shift to the share owned by the top 10%, New Zealand's 11th lowest out of 39; Sweden is second highest. 


  • Mean and median wealth in NZ, as reported in the Credit Suisse data, have increased considerably since 2000. One measure of inequality is the mean/median ratio. If the average increases by a lot more than the median, that suggests that the gains are disproportionately at the top. Here, it's almost rounding error between the two. The mean is 5 times higher than it was in 2000; the median is 4.9 times higher. It would be... odd... to look at that and conclude that all the gains are for the rich. If that were true, growth in median wealth would have been much smaller than the growth in average wealth. 
  • If you want to rail against Top 10%ers, well, the median Kiwi adult is in the global top 10%. 
  • New Zealand is very middle-of-the-road when it comes to global wealth inequality as measured by Gini. 
  • If you want to look instead at the proportion of wealth held by the top 1%, top 5%, or top 10%, New Zealand's rich have much smaller fractions of national wealth than do the rich in Canada, Finland, Norway, Germany, Denmark, and Sweden. Among the 39 countries assessed, New Zealand's rich have between the 9th and 11th smallest wealth shares. 
I suppose I'm glad that global poverty has declined so much that charities that used to spend their time trying to help the global poor now can spend their time doing this stuff instead. 

Oh, and do note all the caveats from previous iterations on this stuff (links below). A pile of what's going on for wealth measures winds up reflecting US dollar exchange rates. That won't affect wealth shares within countries but will affect measures of global inequality and measures like "This richest billionaire has as much wealth as the world's howevermany hundred million poorest people, including a pile of people with net debt due to student loans in rich countries and another pile of people outside of the US whose measured wealth dropped because the US exchange rate went up. That'll also affect the number of Kiwis making any year's iteration of the global Top Whatever Percent. 

* I'm pretty sure that they're using an adults denominator here rather than total population. But I can't guarantee it. If they're using total population, then the median Kiwi is just shy of the global top 10%.