[Joseph_E._Stiglitz,_Carl_E._Walsh]_Economics(Bookos.org) (1)

Thinking Like an Economist
THE DISTRIBUTION OF WEALTH AND OWNERSHIP
OF ASSETS
Although America is a very wealthy society, that wealth is distributed
unevenly among American families. The chart shows
median family net worth in 2001, classified by 2001 income
percentiles. The median income of the 20 percent of families
with the lowest incomes was $10,300, and the median net worth
of these families was just $7,900. That means that half of the
families in this income group had net worth less than $7,900.
For families in the top 10 percent of income earners, median
family income was $169,600, and median net worth was
$833,600.
Not only is less wealth possessed by poor families than by
high-income families, but the types of financial and nonfinancial
assets held by families also differ by income. Wealthy families
are more likely to own stocks and bonds, to hold mutual
funds, and to have retirement accounts. The value of holdings
of nonfinancial assets—cars, homes, nonresidential property,
and businesses—varies widely by income as well. High-income
families tend to have greater holdings in cars, residential property,
and other property than do families with lower incomes,
but the biggest difference across income categories is in the
ownership of businesses. The median value of business equity
held by the 10 percent of families with the highest 2001 income
was $239,500, compared with holdings of $54,400 for the 10
percent of families with the next highest incomes.
THOUSANDS OF 2001 DOLLARS
900
800
700
600
500
400
300
200
100
0
$7.9
<20
$263.1
$141.5
$37.2
$62.5
20–40 40–60 60–80 80–90
PERCENTAGE OF ALL FAMILIES BY INCOME (2001)
$833.6
90–100
MEDIAN NET WORTH BY INCOME PERCENTILE
Thus, while changes in tastes or technology or incomes or the prices of other
goods today could not account for some of the sharp changes in asset values described
at the start of this section, changes in expectations concerning any of these variables
in the future will have an effect today on the demand. Markets for assets are
linked together over time. An event that is expected to happen in ten or fifteen or even
fifty years can have a direct bearing on today’s market.
To evaluate the effects of expected future prices on an asset’s current price, the
concept of present discounted value, introduced in Chapter 9, is important. By
EXPECTATIONS AND THE MARKET FOR ASSETS ∂ 879