A Detailed Look At Global Wealth Distribution

Tyler Durden's picture

By now it should be common knowledge to everyone that in American society, the top wealthiest 1 percentile controls all the political power, holds half the wealth, and pays what is claimed to be the bulk of the taxes (despite mile wide tax loopholes and Swiss bank accounts). The rest of the population is merely filler, programmed to buy every latest self-cannibalizing iteration of the iPad/Pod while never again paying their mortgage and brainwashed to watch 2 hours of prime time TV commercials to keep it distracted from the fact that the last time America was a democracy was around the time the Wright brothers were arguing the pros and cons of frequent flier programs. So far so good. But what about the rest of the world? How is wealth stratified in a global perspective? Where do the "rich" live? What kind of wealth is controlled by various countries? Where are the Ultra High Net Worth people? For answers to all these questions, and much more, confirming that just like in America, the wealthiest 0.5% control over 35% of world wealth, Credit Suisse has compiled and released its latest "Global Wealth Report." The findings are summarized here.

The first figure shows world wealth by region. The US, with its wealth of about $50 trillion, accounts for 25% of total world wealth, which at last check was about $200 trillion. And yes, Europe as a region has a slightly greater wealth portion (32%) than does America (31%).

When it comes to geographic distribution, it is to be expected that North America will have the greatest proportion of people in the ultra wealthy category. Indeed, the chart below confirms this.

Drilling down into asset composition in various countries, it becomes obvious why the Fed is so focused on keeping the stock market high. With America being the wealthiest country in the world, and the bulk of US wealth held in financial assets, offset by a material amount of debt, which confirms that a deflationary spiral would be the end for the "wealth effect" so desired by Ben Bernanke. More from CS: "Consider first the relative importance of financial versus non-financial assets, and the size of debt. Expressed as a percentage of gross household assets, the pattern clearly differs markedly between poorer and richer countries and regions. In developing countries (see Figure 1), for example India and Indonesia, it is common for 80% or more of total assets to be held in the form of non-financial assets, largely housing and farms. A high proportion of real property is also evident in transition countries in Europe, reflecting in part the wholesale privatization of housing in the 1990s. As countries develop and grow, the importance of non-financial assets tends to decline, so that the share in China, for instance, is now close to half. In the richest countries, financial assets typically account for more than half of household wealth. There are interesting exceptions to this general pattern. Recent robust house price rises have propelled the share of non-financial assets above 60% in France and some other major European countries. South Africa, on the other hand, is an outlier in the developing world, with exceptionally high holdings of financial assets: the figure of 80% exceeds the share found in both the United States and Japan." In other words, the more "developed" the world becomes, the greater the amount of wealth tied into the perpetuation of the Ponzi lies. Small wonder why so few in charge are willing to actually do anything that changes the status quo.

Next, it is time to drill down in the specific composition of the financial assets.

Figure 2 provides more detail, showing the breakdown of financial assets into three categories: currency and deposits, equities (all shares and  other equities held directly by households), and other financial assets for selected countries. To add further detail, in most countries the  reserves of life insurance companies and pension funds form the largest component of “other financial assets.” The composition of financial assets differs considerably across countries, especially with regard to the importance of shares and other equities. One interesting trend we note is that equities are not always a large component of household financial wealth, even in countries with very active financial markets. In the United Kingdom and Japan, for example, equities account for just 13% and 9% of total financial assets respectively. In contrast, they make up 37% and 43% of financial assets in Sweden and the USA, respectively. Broadly speaking, the relative importance of currency and deposits falls as that of bonds and equities increases. On the other hand, the portfolio share of “other financial assets” does not vary a lot, staying in the range of about 40%–45%. However, when we come to the UK, Japan and Colombia, which have the lowest portfolio share of equities, the pattern breaks down. The UK has a moderate currency and deposits share, but the largest “other financial assets” share, reflecting large life insurance and pension reserves. Colombia also has more in the form of “other financial assets” than is typical. Japan, on the other hand, which has a strong tradition of saving in deposit form, has a very large currency and deposits share and only a 35% share of “other financial assets.”

An interesting detour looks at gender distribution for asset holders in the US and the UK. As the chart below shows, in the UK women appear to hold more risky assets than men.

Looking at the history of global wealth per adult, net worth peaked just before the first ponzi/credit/housing bubble popped, confirming that a major portion of the then-record $50K/adult net wealth was imaginary. Yet it may have far more to drop: as CS says, "despite the financial crisis, the past decade has in fact been a relatively benign period for household wealth accumulation. Global net worth per adult rose 43% from USD 30,700 in the year 2000 to USD 43,800 by mid-2010. Since the number of adults increased from 3.6 billion to 4.4 billion over this period, aggregate household wealth rose by 72%. One important factor here was the depreciation of the dollar against most major currencies, which accounts for part of the rise in dollar-denominated values, but average net worth still increased by 24% when exchange rates are held  constant." The next question is how much latent dollar devaluation has been accrued to this point and how much more is due to only gradually emerge.

The next chart is rather self-explanatory. The richest nations, with wealth in 2010 above USD 100,000 per adult, are found in North America,  Western Europe, and among the rich Asian-Pacific and Middle East countries. They are topped by Switzerland, Norway, Australia, Singapore and  France, each of which records wealth per adult above USD 250,000. Average wealth in other major economies such as the USA, Japan, the  United Kingdom and Canada also exceeds USD 200,000.

And some more detail on the various wealth regions:

 

Emerging wealth: The band of wealth from USD 25,000 to USD 100,000 covers many recent EU entrants (Poland, Hungary, Czech Republic,  Slovakia, Latvia, Lithuania, Estonia, Cyprus) and important Latin American countries (Mexico, Brazil, Chile), along with a number of Middle  Eastern nations (Lebanon, Saudi Arabia, Bahrain).

Frontier wealth: The main transition nations outside the EU, including China, Russia, Belarus, Georgia, Kazakhstan and Mongolia, fall in the USD 5,000 to USD 25,000 range, together with some of their Far East neighbors (Indonesia, Thailand) and most of Latin America (Colombia,  Ecuador, Peru, El Salvador). The group also contains a number of African nations at the southernmost tip (South Africa, Botswana, Namibia) and on the Mediterranean coast (Morocco, Algeria, Tunisia, Egypt).

Finally, the category below USD 5,000 comprises almost all of South Asia, including India, Pakistan, Bangladesh and Nepal, and almost all of Central and West Africa.

Next is a pie chart of with a detailed break down of wealth distribution by region.

Credit Suisse provides a look at geographic wealth distribution by decile:

To be among the wealthiest half of the world, an adult needs only USD 4,000 in assets, once debts have been subtracted. However, each adult requires more than USD 72,000 to belong to the top 10% of global wealth holders and more than USD 588,000 to be a member of the top  1%. The bottom half of the global population together possess less than 2% of global wealth, although wealth is growing fast for some members of this segment. In sharp contrast, the richest 10% own 83% of the world’s wealth, with the top 1% alone accounting for 43% of global assets. Figure 4 shows how the regions of the world are represented amongst the wealth deciles. Unsurprisingly for example, North America and Europe together make up the lion’s share of the top wealth decile (10%). China has relatively few representatives at the very top and bottom of the global wealth distribution, but dominates the middle section, supplying more than a third of those in deciles 4–8. The sizeable presence of China in the middle section reflects not only its population size and moderate average wealth level, but also relatively low wealth inequality. China’s position in the global picture has shifted upwards in the past decade as a consequence of a strong record of growth, rising  asset values and the appreciation of the renminbi relative to the US dollar. China already has more people in the top 10% of global wealth  holders than any country except for the USA, Japan and Germany, and is poised to overtake both Germany and Japan in the near future.

Next is the chart that everyone has seen as it pertains to America,
but few have seen in terms of the entire world. Per CS, Figure 1 shows
“The global wealth pyramid” in striking detail. It is made up of a solid
base of low wealth holders with upper tiers occupied by fewer and fewer
people. We estimate that 3 billion individuals – more than two thirds
of the global adult population – have wealth below USD 10,000. A further
billion adults (24% of the world population) are placed in the USD
10,000–100,000 range, leaving 358 million adults (8% of the world
population) with  assets above USD 100,000. Figures for mid-2010
indicate that 24.2 million adults are above the threshold for dollar
millionaires. While they make up less than 1% of the global adult
population, they own more than a third of global household wealth. More
specifically, individuals with wealth above USD 50 million are estimated
to number 81,000 worldwide.

Some more details on the various tiers of the pyramid:

Bottom of the pyramid

The
various tiers of the wealth pyramid have distinctive characteristics.
The base level is spread broadly across  countries. It has significant
membership in all regions of the world, and spans a wide variety of
family circumstances. The upper wealth limit of USD 10,000 is a modest
sum in developed countries, excluding almost all adults who own houses,
with or without a mortgage. Nevertheless, a surprisingly large number of
individuals in advanced countries have limited savings or other assets.

A
high proportion are young people with little opportunity or interest in
accumulating wealth. In fact, limited amounts of tangible assets 
combined with credit card debts and student loans lead many young people
to record negative net worth. In Denmark and Sweden, for example, 30%
of the population report negative wealth. This is an important and often
overlooked segment, not least in the context of the credit crisis.

Low
wealth is also a common feature of older age groups, particularly for
those individuals suffering ill health and exposed to high medical
bills. In fact, the means testing applied to many state benefits,
especially contributions to the cost of residential homes, provides an
incentive to shed wealth. Nevertheless, relatively few people in rich
countries have net worth below USD 10,000 throughout their adult life.
In essence, membership of the base section of the global wealth pyramid
is a transient, lifecycle phenomenon for most citizens in the developed
world.

The situation in low-income countries is different. More
than 90% of the adult population in India and Africa fall in this band;
in many low-income African countries, the fraction of the population is
close to 100%. However, the cost of living is usually much lower. For a
resident of India, for instance, assets of USD 10,000 would be
equivalent to about USD 30,000 to a resident of the United States. In
much of the  developing world, this is enough to own a house or land –
albeit possibly with uncertain property rights – and to have a
comfortable lifestyle by local standards.

Middle of the pyramid

The
billion adults in the USD 10,000–100,000 range form the middle class
from the perspective of global wealth. With USD 32 trillion in total
wealth, it certainly carries economic weight. This tier has the most
regionally balanced membership, although China now contributes almost a
third of the total. The wealth range would cover the median person over
most of his adult life in high income countries. In middle income
countries it would apply to a middle class person in middle age.
However, in low-income countries only those in the top decile qualify,
restricting membership to significant landowners, successful
businessmen, professionals and the like.

High segment of the pyramid

When
we consider the “high” segment of the wealth pyramid – the group of
adults whose net worth exceeds USD 100,000 – the regional composition 
begins to change. With almost 358 million adults worldwide, this group
is far from exclusive. But the typical member of the group is very
different in different parts of the world. In high income countries, the
threshold of USD 100,000 is well within the reach of middle-class
adults once careers have been established. In contrast, residents from
low-income countries would need to belong to the top percentile of
wealth holders, so only the exceptionally successful, well endowed or
well connected qualify.

The regional contrast shows up in the
fact that North America, Europe and the Asia-Pacific regions account for
92% of the global membership of the USD 100,000+ group, with Europe
alone home to 39% of the total. As far as individual countries are
concerned, the membership ranking depends on three factors: the
population size, the average wealth level, and wealth inequality within
the country. Only 15 countries host more than 1% of the global
membership. The USA comes top with 23% of the total. All three factors
reinforce each other in this instance: a large population combining with
high mean wealth and an unequal wealth distribution. Japan is a strong
runner-up, the only country at present to seriously  challenge the
hegemony of the USA in the global wealth ranking. Although its relative
position has declined since the year 2000 due to lackluster stock market
and housing market performance, Japan is still home to 15% of
individuals with wealth above USD 100,000.

Top of the pyramid

At
the top of the pyramid, we find the world’s millionaires, where we
again witness a slightly different pattern of membership. The proportion
of members from the United States rises sharply to 41%, and the share
of members from outside of the North America, Europe and Asia-Pacific
regions falls to just 6%. The relative positions of most countries move
downwards, but there are exceptions. The French share is estimated to
double to 9%, while Sweden and Switzerland are each now credited with
more than 1% of the global membership.

And next, is a detailed look at the very top of the pyramid: those individuals which have over 1 million in net worth.

To assemble details of the pattern of wealth holdings above USD 1 million requires a high degree of ingenuity. The usual sources of data – official statistics and sample surveys – become increasingly incomplete and unreliable at high wealth levels. A growing number of publications have followed the example of Forbes magazine by constructing “rich lists,” which attempt to value the assets of particular named individuals at the apex of the wealth pyramid. But very little is known about the global pattern of asset holdings in the high net worth (HNW – greater than USD 1 million) and ultra high net worth (UHNW – from USD 50 million upwards) range.

We bridge this gap by exploiting well-known statistical regularities in the top wealth tail. Using only data from traditional sources in the public  domain yields a pattern of global wealth holdings in the USD 250,000 to USD 5 million range, which, when projected onward, predicts about  1000 dollar billionaires for mid-2010. Although not exactly comparable, this number is very close to the figure of 1,011 billionaire holdings reported by Forbes magazine for February 2010. Making use of the regional affiliation recorded in rich lists allows us to merge the top tail  details with data on the level and distribution of wealth derived from traditional sources in order to generate a regional breakdown of HNW and UHNW individuals. At this time, we do not attempt to estimate the pattern of holdings across particular countries, except China and India which are treated as separate regions. However, as a rule of thumb, residents of the USA account for about 90% of the figure for North America.

The base of the wealth pyramid is occupied by people from all countries of the world at various stages of their lifecycle. In contrast, HNW and UHNW individuals are heavily concentrated in particular regions and countries, but the members tend to share a much more similar lifestyle,  often participating in the same global markets for high coupon consumption items. The wealth portfolios of individuals are also likely to be  similar, dominated by financial assets and, in particular, equity holdings in public companies traded in international markets. For these reasons, using official exchange rates to value assets is more appropriate, rather than using local price levels to compare wealth holdings.

Our figures for mid-2010 indicate that there were 24.5 million HNW individuals with wealth from USD 1 million to USD 50 million, of whom the vast majority (22 million) fall in the USD 1–5 million range. North America dominates the residence ranking, accounting for 11.1 million HNW individuals (45% of the total). Europe accounts for 7.8 million (31.7%) and 4.1 million reside in Asia-Pacific countries other than China and India. We estimate that there are now more than 800,000 HNW individuals in China, each worth between USD 1 million and USD 50 million (3.3% of the global total). India, Africa and Latin America together host the remaining 740,000 HNW individuals (3.0% of the total).

The take home message is that the wealthiest people in the world have the bulk of their wealth entrenched in the current system and any dramatic overhaul or reset of the status quo will be met by the stiff resistance of those who can summon fleet of jets, private armies, and even Fed chairmen on a whim. Whether anyone will have the wherewithal to confront the broken system under such conditions remains to be seen.

And for those seeing more granular detail by country, below are the profiles of the 15 or so wealhtiest countries.

 

h/t London Dude Trader

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Bringin It's picture

OddJob!  You were great in that movie.  Hey, you were there.  What's really in Ft. Knox?

chopper read's picture

"player haters" of the world unite.  

Bob's picture

The take home message is that the wealthiest people in the world have the bulk of their wealth entrenched in the current system . . .

which this data shows is heavily concentrated in "financial assets, particularly equities." 

This was not an exercise in either stoking class envy or disgust with same, but in connecting the financial interests of those who undeniably wield the levers of power to  the recent inflation of equities at all costs, e.g.,  the public debt and/or currency devaluation that their efforts require.

The message had nothing to do with comparisons of historical versus current standards of living, as far as I could see. 

 

cxl9's picture

The unstated message of all of these sorts of articles is that concentration of wealth is a problem that needs to be fixed.

snowball777's picture

The drastically uneven and rapidly accelerating state of same? Most definitely. Only the most fervently retarded among us, dear Antoinette, cannot see how continuing down this path will end for you and yours. Don't worry though; you won't feel a thing.

cxl9's picture

I'm sure. Keep fighting the revolution from mommy's basement, comrade.

 

Star Hawk's picture

*yawn*,*stretch arms*,*long exhale*

Ok, i'm gonna go ahead and put you on a: pasty, middling IT manager with an above-average waistline and retirement account who manages to fuck his fugly suburban wife once or twice a month through the miracle of micro-brew and viagra.  If you're another example of "winner", then I'm once again thankful for never playing along.  Oh, and thanks for reproducing!

snowball777's picture

I didn't say I was going to put you under the blade; I've got kids and can't afford to spend time in jail over the likes of your dumb ass. If you have no need for enlightened self-preservation, so be it. I seriously doubt anyone on the planet could miss such a gaping a-hole anyway.

 

still kicking's picture

wrong wrong wrong wrong wrong, look no one has the right to force another to give up his or her wealth.  What needs to be fixed is favoritism and the concentration of wealth making and skewing all the rules/laws in their favor to keep the wealth.  Even the damn playing field, give the common man a chance to make something and play the game, if they lose their wealth that way too damn bad or if you get even wealthier good for them.  You go down a dangerous road when you suggest "fixing" distribution of wealth.

Sean7k's picture

The purpose of the trilateral commission is to structure the world into three regions: each with a exploitable region of cheap labor. US=Latin America, Europe=Africa and China/Japan= southeast asia. 

Now, go back to the pie chart with the regional distribution of wealth. Mission accomplished.

Coldfire's picture

How about the global distribution of productivity?

chopper read's picture

"How about the global distribution of productivity?"

chopper read's picture

"How about the global distribution of productivity?"

chopper read's picture

"How about the global distribution of productivity?"

chopper read's picture

i'm just fucking around, snowball.  mocking in type. nevermind.  you're right. 

snowball777's picture

Bien sur...I was amused by the meta-post meme; subtle and clever.

Atomizer's picture

Typically Governments issue a budget and the IRS publishes new tax structures for upcoming year.

The Obama administration doesn't comply with the rules of law. We have to wait until after the November elections to find out.

Pelosi: we have to pass the health care bill so that you can find out what is in it

http://www.youtube.com/watch?v=KoE1R-xH5To

 

Mercury's picture

The take home message is that the wealthiest people in the world have the bulk of their wealth entrenched in the current system and any dramatic overhaul or reset of the status quo will be met by the stiff resistance of those who can summon fleet of jets, private armies, and even Fed chairmen on a whim.

One would hope that extreme currency debasement, hyper-inflation or government confiscation of property will be met with stiff resistance by this crowd too.

chopper read's picture

you can protest the entire system by buying gold.  its true!!!

snowball777's picture

the truly daring will attempt to use simple barter and wumpum.

chopper read's picture

gold is just something shiny and portable to barter.  wumpum?  ...as long as i can smoke it then i'm game!

Atomizer's picture

Smart money will pull out of the system prior to any chance of government intervention. It will happen that quickly. Mark my words.

Mercury's picture

And that may well be the tipping point.  There's not much discretionary retail money in the market to make much of an impact these days and all those Magellan-type mutual fund and ETF managers don't have the mandate to suddenly bail out of securities into cash.

 I think it's ridiculous if this last paragraph is trying to imply that the American financial elite (who knows about the international elite) are, to a man, permanently in bed with the current political elite and will go down with the ship if Obama/Gore/Bernanke style central planning and new world order doesn't actually work out.

Even somone like Soros, who obviously wants, pushes and wishes for a Lefty uber-government of staggering power, would probably short the float in Obama Co. the second he thought the game was up.

chopper read's picture

Soros DID short Obama (via equities) on the original stimulus and made a fortune.  

frankTHE COIN's picture

The Wright brothers were Wrong !

Argos's picture

I really want to get to that $5 MILLION level.  That sounds really warm and fuzzy.

snowball777's picture

By the time you do, will you still be able to enjoy it?

---

money, yeah all the money there is

but who wants to be the richest guy in some cemetary?

not much to spend it on, eh gramps?

gettin too old to cut the mustard

how does a young body grab ya?

like three card monty, like pea under the shell

now you see it, now you don't

forgetting something, gramps?

in order to feel something,

you got to be there

you've got to be eighteen

but you are not eighteen

you are seventy-eight

old fool sold his soul for a strap-on

- burroughs

cossack55's picture

We will all be there in about 5 months.

DollarMenu's picture

It is interesting to me to find here, in this day of multi-billion dollar bail-outs, and multi-trillion dollar debts, in a population of 4.1 billion adults on the planet,

only 81,000 have amassed piles in excess of $50 million.

That is not a lot of people, and I wonder just how much in excess of $50 million they have.

 

Bear's picture

and just how much of the "multi-billion dollar bail-outs" they got.

Kobe Beef's picture

I didnt get any, so they definitely have my share.

Bear's picture

Sorry Dude, I got my share, so now I'm on my way to Kuala Lumpur

Kobe Beef's picture

hahaha! make sure you spend it on something fun!

Bob's picture

Major work there, Tyler!  Interesting where it lead us--right to our proxy master, Mr. Market. 

Sure puts alot of things in perspective. 

Sqworl's picture

http://www.youtube.com/watch?v=8F_G2zp-opg

Tyler: The perfect video for this Thread...wee

OldTrooper's picture

Since we are talking about money, this one seems to fit too:

http://www.youtube.com/watch?v=sZHCVyllnck&feature=related

Bear's picture

I saw Columbia had a pretty good balance of financial assets (i.e. < 5% equities). But my question is do 'other financial assets' include cocaine futures of their resultant derivative?

Atomizer's picture

Obama said that the US will "insist on more responsibility" and "mutual accountability" and promised top "work with congress to better match our investments with the priorities of our partner countries".

http://www.youtube.com/watch?v=o-VAhJywjuI

line, hook and sinker

Bear's picture

Obama ... "We must do better" ... Boy that is sure an understatement. I am just waiting for him to "insist on more responsibility" and have more "mutual accountability" himself.

I am so tired of him ranting on about how the United States should do more for the world ... as if we haven't been at the forefront of every rescue since 1941 ... and the primary support for every world currency, the IMF and the United Nations. He says that this is the first Administration in history that "blah, blah, blah"   

Endstrategy's picture

How do I request a story?

I'd like to see another "Open Thread: State of the Economy" like you had in March.

I'd also like to read what zerohedge readers think about safest places on Earth to live in a beach cabana/escape/hide money/survive if the SHTF.

Bear's picture

I vote for Singapore ... as long as you have a couple of million and don't have a proclivity for spitting.

Oracle of Kypseli's picture

Very expensive, clean, but lot's of traffic and permit required to drive in the downtown zones were all the action is.

KL much better.

Kobe Beef's picture

Hello Oracle,

Do you know any good places to store gold in KL?

Thanks,

Beef

Bear's picture

Probably so but he said 'safest' ... KL may soon be too dangerous for Gringo Christian

fiddler_on_the_roof's picture

Singapore clean? I saw beer cans on sidewalk in good areas. People
Drinking and smoking on sidewalks. Open sewer in small alley streets - I even took video of that because we are told otherwise. A Chicago
Suburb is much cleaner than Singapore.

Otherwise I like Singapore and the whole country is like a giant
Shopping mall. Malls everywhere and people always on the street
Walking into these malls. Lots of apartments everywhere.

chindit13's picture

Too damn sterile for me.  Convenient, efficient, clean, access to a wide range of tasty cuisines, but in the end, sterile.  And I don't like monarchies.  Oops, I think they call it a One Family Democracy.