Tag Archives: wealth

What women own: U.S. business edition

The other day President Obama celebrated women owning businesses, as well as the problems they face:

More women are also choosing to strike out on their own.  Today, nearly 30 percent of small business owners are women.  Their businesses generate $1.2 trillion last year. But they’re less likely to get the loans that they need to start up, or expand or to hire — which means they often have to depend on credit cards and the mounting debt that comes with them.

Those figures come from data I already was looking at on the question of what women own globally. Most recently, I took a shot at home ownership, with the surprising (to me) finding that women own (or are buying) more homes than men in America. No such luck with business ownership.

Women do own 29% of businesses, as of the Census Bureau’s 2007 Survey of Business Owners. But their share of business receipts — the total size of businesses, as measured by income — is much less: just 4%.

Source: My calculations from the Survey of Business Owners.

The survey defines ownership based on 51% of stock or equity.  So of course there are lots of women with partial ownership of all those other businesses. But the vast majority of businesses in the survey are tiny, with few or no employees. As a measure of wealth, then, owning a business is a bad indicator. Plenty of these people would make more money using their skills working for someone else, if they could (and investing their money in stocks).

Unsurprisingly, there is a distinct pattern of ownership by industry — that is, what the businesses produce. The only industry in which women own a majority of businesses is health care and social assistance, although they are also close in education (think daycare services):

Source: My calculations from the Survey of Business Owners.

Obama went on:

Just 3 percent of Fortune 500 CEOs are women.  Fewer than 20 percent of the seats in Congress are occupied by women.  Is it possible that Congress would get more done if there were more women in Congress?  (Laughter and applause.)  … I think it’s fair to say.  That is almost guaranteed.  (Laughter.)

For some reason this is often a laugh line. As in, “Am I right? Just ask my wife!”

Anyway, I would hate to judge Congressional effectiveness by the quantity of work done, and the evidence that women in Congress do get more done is not clear. But in the world of business our own research (here and here), as well as newer work, does suggest that U.S. women in workplace management positions increase the gender equality around them.

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How the 1% meme obscures global inequality

One irony of the 1% meme — the myth that women only earn 10% of the world’s income and own 1% of all property — is that it presents as a statement of global gender solidarity, while undermining true understanding of global inequality.

In my first post on this, I pointed to how a few relatively rich women (that is, all US women), disprove the 1% meme’s message that women share a condition of economic deprivation:

In the U.S. in 2009, the 106 million women have incomes averaged $29,700 each. I think that’s $3.2 trillion. The whole world’s gross domestic product — a rough measure of total income — is $58.1 trillion. So, it looks to me like U.S. women alone earn 5.4% of world income today.

Later, I showed that American women — in fact, single American women alone — own more than 1% of the world’s wealth.

What about home ownership?

Homes are the main repository of wealth in middle class America. I haven’t found a study on the gender composition of home ownership. Partly, as with land ownership, it’s impossible to say because so many homes are owned by various collectivities — mostly married couples, banks and the state.

But the Census Bureau’s American Community Survey questionnaire asks which homes are owned by their residents (with or without a mortgage) versus rented. And it identifies the person in each household “in whose name this house or apartment is owned, being bought, or rented.” That person is called the “householder.” In an owned home, it’s reasonable to say that person is the owner. If the person is married, I assume the couple owns the home together. From the 2010 ACS, then, here is the breakdown of who owns the 75 million “owned” homes:

This shows that women are the homeowners (living alone, or living as a householder with no spouse) in 24% of owned homes, compared with 15% for men. If we assume the married-couple owned homes are equally owned by men and women, then women own more homes in the US than men do.

When well-meaning feminists spread the meme that women only own 1% of the world’s property, in the name of global solidarity, they conceal the vast inequality between women in rich versus poor countries.

There is economic inequality between men and women, but gender is not class. And woman does not equal poor.

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Twin peaks of intergenerational mobility

There is a lot of news about economic mobility from recent weeks. Some of it draws from Pew’s Economic Mobility Project. Not as recently, there was an excellent review and analysis by Emily Beller and Michael Hout in the Future of Children a few years ago. In between, I somehow missed a collection of economic analyses in a book titled, Unequal Chances: Family Background and Economic Success, edited by Samuel Bowles, Herbert Gintis, & Melissa Osborne Groves.

The first chapter is posted free, and it includes a good introduction to the statistical and conceptual issues that arise when trying to understand patterns of mobility across generations. It includes a discussion of heritability, genetics, IQ and the like, which is quite approachable to the reader who is ready to think about decomposing correlations.

One good example regarding genetic heritability of traits that determine income: race in South Africa, which is almost entirely inherited (since there’s very little interracial marriage) and has a huge effect on income, but the effect of which is still social/environmental, not “natural.”

Anyway, I like this “twin peaks” figure, which shows the relationship between parent and child family income decile:

Probability of offspring attaining given income decile, by parents’ income deciles, United States. Based on total family income for black and white participants in the Panel Study of Income Dynamics who were born between 1942 and 1972, and their parents. The income of the children was measured when they were aged 26 or older, and was averaged over all such years for which it was observed. The number of years of income data ranged from 1 to 29 with an average of 11.5; the median year of observation was 1991. Parents’ income was averaged over all observed years in which the child lived with the parents. The number of years of income data ranged from 1 to 27 with an average of 11.9; the median year of observation was 1974. The simple age adjusted correlation of parents’ and children’s incomes in the data set represented in the figure is 0.42.

So, 30% of children from the top decile stay there (point D), 32% of children from the bottom decile stay there (C), while the odds of making it from the top to the bottom, or vice versa, are both less than 2% (A and B).

There is a nice symmetry to the figure, but it’s important to know that what’s happening up and down the distribution is highly varied, according to the analyses in the book. For example, at the top there is a lot of transmitted wealth. At the bottom there are a lot of health crises and premature deaths, including from violence. And the bottom is much stickier for Black children than for Whites.

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How much wealth for women? More than 1%

Stop me when you’re convinced women own more than 1% of all the world’s wealth.

There is a real problem with this women-own-just-1%-of-all-wealth thing. It’s not just that it represents a failure of education in the areas of ballpark-demography and statistical critical-thinking. It’s that people who fall for it aren’t realizing how rich the rich countries are — including the women in them — in the global scheme of things. Like I said at the beginning of this, if global feminist unity is to be had, it won’t be built on a shared poverty experience.

Since people keep asking, I decided to give up on the argument that this needs no refuting, and spend an hour proving it can’t possibly be true, that it must be off by large orders of magnitude. (Well, it was an hour to find the data, but working it all out took a little longer.)

If you need to catch up first, these are the posts in this series so far:

March 1: Stop that viral statistic meme.

April 29: What is the 1% meme solution?

September 20: Follow the bouncing 1% meme…

OK, here goes.

Exhibit A: from U.N. Development Programme’s website

Claim: Women own 1% of all property in the world

This is the original claim from the editor’s introduction to the journal World at Work in 1978. And according to the rationale later written by that editor, Krishna Ahooja-Patel, the number was derived from a (dubious) estimate that women earned 11% of income, and therefore “they do not normally have any surplus to invest in reproducible or non-reproducible assets.”

Various people have since changed “property” to “land” or even “titled land” — never with any research that I have seen — I guess to make it seem more reasonable, but it’s clear from this context that the original claim was about total assets, or what is normally called wealth or net worth.

Debunking strategy: Find a small group of women who own more than 1% of world wealth.

This is much simpler than trying to estimate the actual share of world wealth owned by women. If any small group of women owns more than 1%, that should put the matter to rest. (Dream on.) If someone else can figure out the details for all the other women in the world, that would be great.

I decided to figure out the wealth owned by single women in the U.S. That’s because U.S. data are pretty good and available, the women are pretty rich (in the scheme of things) so they’re likely to satisfy the goal, and single women are simpler because you don’t have to worry about shared wealth. (If married men and women share their wealth equally, the whole women-own-1% thing is obviously impossible, and anything else requires a rule for arbitrarily separating husbands’ and wives’ wealth. And for simplicity I set aside the question of government-owned assets, which are arguably part of “the world’s wealth,” too.)

Looking for a few rich women.

Evidence:

1. World wealth held by households is $181 trillion.

I got that from a National Bureau of Economic Research working paper by James Davies and colleagues. They estimated mean global household per capita wealth in 2000 was $29,738. With a global population of 6.09 billion, that means global wealth was $181 trillion.

2. U.S. household wealth is $40 trillion.

Davies et al. have a figure of $144,000 household wealth per person for the U.S. in 2000, which yields an estimate of $40.4 trillion. I believe the basis for that U.S. estimate is the Federal Reserve Board’s Survey of Consumer Finances. The tables there for 2001 show average household net worth was $397,000. With a Census estimate of 108 million households in 2001, that would be $43 trillion, so it’s pretty close. I use those tables for the calculations below because they break it down by household type.

(Before you say these seems too high, remember these are means, not medians, so the very rich are in there too — and the top 100 individuals in the U.S. alone today have about $953 billion, which is more than $3,000 per person right off the top.)

3. Unmarried women own 7% to 13% of U.S. household wealth.

A 2006 paper by Alexis Yamokoski and Lisa Keister, published in Feminist Economics, used the National Longitudinal Survey of Youth (now grown up) to estimate net worth. They found an average of $160,000 per adult, and single women had mean net worth of $63,000 in 2000 dollars. Single women were 17% of that sample, so their share adds up to 7.2% of the total. Their figure is lower per person, but the breakdown allows a reasonable guess of the share held by single women.

Using the Federal Reserve Board numbers is tricky because they didn’t differentiate between single men and single women. Also, they only report on households, not individuals. But using their categories, I can make a good guess. They reported mean net worth of:

  • $95,800 for single parents with children (of which there were 11.1 million who were women, according to Census data)
  • $151,400 for single householders under age 55 without children (8.5 million women)
  • $290,400 for single householders age 55+ without children. (10.6 million women)

If single women had the same net worth as single men, these figures would give them a total of $5.4 trillion. Is that reasonable? In Tamokoski and Keister’s paper the mean net worth of single fathers ($48,000) is about the same as single mothers ($47,000), and among those without children single women actually have higher net worth ($111,000 versus $95,000) — which is not crazy when you consider all those older women widows, and that richer men are more likely to marry (and remarry). So I’ll say women’s net worth is equal to the average for each category.

If that $5.4 trillion is correct, then, relative to the total in the Federal Reserve Board wealth estimate of $43 trillion, single women own 12.7% of all household wealth.

4. Single women in the U.S. own 1.6% to 3.0% of world household wealth.

To review:

  • World wealth:  $181 trillion
  • U.S. wealth: $40 trillion
  • Share of U.S. wealth held by single women: 7.2% to 12.7%.

Thus, my range of estimates for share of world wealth held by U.S. single women is between 1.6% (7.2% of $40 trillion as percentage of $181 trillion) and 2.8% (12.7% of $40 trillion as percentage of $181 trillion).

Conclusion

So, by my lowest estimate, no matter how much the billions of other women in the world own — all married women in the U.S., all single and married women in every other country on earth — women own more than 1%.

Richy Rich addendum

OK, wealth is very, very concentrated. So a sample survey such as the National Longitudinal Survey of Youth won’t catch the very richest people — even if they answered the survey, their numbers would be so extreme as to be considered suspect by the analysts. How big a difference could this make?

There are 42 women in the latest Forbes list of the richest 400 Americans, from Christy Walton (net worth $24.5 billion), down through Oprah ($2.7 billion) to the poorest, Campbell Soup’s Charlotte Weber ($1.3 billion). Together, these women alone are worth $172 billion, which is 0.1% of world wealth — that’s one-tenth of the meme’s total for all women in the world!

Just a little further away, in Europe, L’Oreal empress Lillian Bettencourt is worth $13.4 billion, and BMW heiress Susan Klatten is worth $10 billion. Etc. Yes, women are very underrepresented among the super rich, but the few that there are do a lot to push “all women” past the lowly threshold of 1%.

Lillian Bettencourt: $13B large.

Can I stop now?

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If we could teach kids one thing

Is “self control” that thing?

The parenting advice pile in my blog reader is brimming over again. It’s a frustrating pile, which includes everything from marketing hucksters to well-intentioned ignorance and naive extension of reasonable ideas to unsupported generalizations. One recent article, however — which didn’t come through the parenting channels — offers a model of scientific method. It also reinforces some basic facts about inequality, and shows the limits of what we know.

Researchers Terrie Moffitt and colleagues, writing in the Proceedings of the National Academy of Sciences, traced a sample of children born in New Zealand in the early 1970s through age 32. Their study used a measure of “self control” from the first 10 years of life to see whether it was associated with health, wealth, and criminality by age 32.

By “self control” — the key concept in the study — they mean:

nine measures of childhood self-control [including] observational ratings of children’s lack of control, parent and teacher reports of impulsive aggression, and parent, teacher, and self reports of hyperactivity, lack of persistence, inattention, and impulsivity.

The study is observational, rather than experimental, in that they didn’t assign children to a self-control condition, but rather just observed how they turned out in relation to the self control they displayed. That means we can’t conclude the relationship is causal. There are lots of things about these kids and their lives that we don’t know, which could be hiding behind that self-control “effect.” (If we could get this idea alone to catch on with the parenting-advice-reading public, the social world would be a more relaxed place.)

Anyway, to me, three things stand out in their results:

  1. Self control does successfully predict health, wealth and criminality in the ways they expect. Kids with higher levels of self control do better on these measures later in life. And that holds with simple statistical controls for family socioeconomic status (low versus not low), and childhood IQ score (low versus not low).
  2. Family socioeconomic status (SES) is even more important. We already knew that, but it’s nice to be able to see that, even controlling for IQ and self control, SES is a key determinant of well being later in life.
  3. IQ scores in childhood are the least important, compared with SES and self control.

The authors are focused on self control, and their correlational evidence is quite strong, as seen in this key figure:

One more empirical point to reinforce: even though the science news was headlined “Don’t Take that Cookie!“, this article does not show that efforts to change children’s self control have beneficial effects. Although they do find that children whose self control improves over time are headed in a good direction, that improvement is not from the result of a measured intervention. So we really can’t say that working to improve self control makes a difference. Not that there’s anything wrong with it.

Finally, let me add one point on the philosophy of social science regarding studies like this. Neither this nor any other study of what makes children “turn out” a certain way speaks to absolute principles of well being — they are all socially situated in space and time. That is, there may be social contexts in which self control matters more, or less, than it did among New Zealanders born in 1972-73; the same holds for IQ scores and socioeconomic status.

As we should expect, today’s parents are concerned with what they can do to help their kids in the social here and now sweepstakes. But from a social point of view, we might just as concerned with how to reduce the well-being gaps between those with more versus less self control, IQ points and socioeconomic status as we are with how to get some kids more of these assets in order to help them get ahead. That’s our choice.

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Sociology wedding sleuth (because you can’t make this stuff up)

Yesterday’s plantation-owning politicians beget today’s banking oligarchy.

OK, that’s an exaggeration. The wedding of Margaret Gawthrop Klarberg and Bruce Lee Kennedy II doesn’t really cement the banking oligarchy. It just shores it up a little. She, a Penn graduate, a senior vice president for marketing at Bank of America. He, a graduate of Dartmouth and Stanford, a vice president for investment managing at D. F. Dent, and a former banking analyst for Goldman, Sachs.

They, amazingly, both are descended from governors of Virginia, with counties named after their families, and family fortunes built on plantations that happened to own slaves. You can’t make this stuff up. According to the NY Times story — which voids a couple’s right to not have their family history used in sociology lessons:

The bride and bridegroom each trace their ancestry to Virginia’s Colonial era. She is a descendant of Thomas Barbour, a member of the Virginia House of Burgesses from 1769 until 1775. The bridegroom is a descendant of Patrick Henry (1736-1799), founding father and first governor of the Commonwealth of Virginia.

That’s more than enough to get the sociology wedding sleuth — powered by Google and Wikipedia — up and running.

So, she is a descendant of Thomas Barbour, a member of the House of Burgesses. They have a county (or maybe two) named after them. Thomas’s son James, born in 1775, was the really famous one, a governor of Virginia, a U.S. senator, and U.S. secretary of war. As a child of the Barbour plantation, he got his own start as a young plantation owner at the tender age of 23, when, according to (how-could-it-be-wrong?) Wikipedia, “With wedding gifts from his father, James was able to slowly acquire his own personal wealth. By 1798, he owned several slaves and was prepared to begin his own plantation.”

James  Barbour (right), and Margaret Gawthrop Klarberg, descended from Barbour’s father, Thomas.

Thomas Jefferson designed one of the family’s houses, the ruins of which remain a historic landmark and site of a winery:

According to one published history, the family traces its American origins to the 17th century. One guy in the Barbour family of Virginia (John S.), who was in the House of Representatives from Virginia in the 1820s, had a son (John S.), a railroad executive, later in the U.S. Senate. Another son (James), served in the state legislature and was a member of the secession convention, and then served on the staff of Confederate General Richard Ewell. James’s son Alfred M. was the commandant of the arsenal at Harper’s Ferry at the time of the John Brown raid. Etc, etc.

The groom’s family also has a county named after them! His ancestor, the Founding Father Patrick Henry, also got slaves for his wedding, according to Wikipedia: “As a wedding gift his father-in-law gave the couple six slaves and the 300-acre Pine Slash Farm.”

Patrick Henry (left), and his descendant, Bruce Kennedy II.

As of 2008, she was reported to own a charming 2,700-sq. foot home in Philadelphia, which she bought from her dad, around the corner from the Betsy Ross house in the city’s old historic district.

Ah, the mysteries of love.

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Rich budget, poor budget

Now that $250,000 is the official definition of a “rich” family, let’s compare budgets.

The Washington Post reports that “$250,000 is etched in the minds of policymakers and pundits as the number that separates the middle class from the wealthy.”

To see how the other 2.9% of couples live, the Post got an accounting firm to calculate a budget for a two-earner, professional couple with two kids (one toddler, one in school), assuming $250,000 of earned income. (They did it for 8 cities, which I just averaged here.)

Here’s how they might spend their money:

The total is actually about $260,000, but it’s likely a family with that kind of earned income has some investment income coming in, so they’re probably still in the black.

On the other hand, here’s a basic budget, from the Economic Policy Institute, which has a calculator of basic-needs costs for cities across the country. Their estimated necessities for a family of four in Akron, Ohio is about $52,000, broken down like this:

To scale with the “rich” budget, it would look more like this:

 

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No wealth for the weary

A new report shows the Black-White wealth gap keeps growing.

Researchers at Brandeis University compared family net worth (excluding home equity) between 1984 and 2007. They report:

  • The wealth gap between whites and African Americans increased more than 4 times, from $20,000 to $95,000.
  • Middle-income white households had greater gains in financial assets than high-income African Americans; by 2007, they had accumulated $74,000, whereas the average high-income African American family owned only $18,000.
  • In 2007, one in ten African-Americans owed at least $3,600, almost doubling their debt burden since 1984.
  • At least 25% of African-American families had no assets at all to turn to in times of economic hardship.

The report is not clear on how the data, from the Panel Study of Income Dynamics, are handled. They write that it reflects “the same of families over 23 years (1984-2007),” and “changes in wealth of families headed by an adult (age 25-55) in 1984.” If that’s the case, lots of these folks would have died, family composition would have changed, etc., and they don’t say how all that affects the analysis.

But if I read it right, they break them into income groups based on their 1984 incomes, and track them through the next 23 years. In that case, I’m especially struck by lack of progress among African American families with higher incomes at the start of the period. While the high-income White families saw their net worth increase in the last generation, Black families with higher incomes did not gain ground asset-wise.

The report has references to some of the literature on race and wealth issues, making it a good place to start on the subject.

While we’re on the subject, a little global context. From a 2008 U.N. working paper, per capita wealth circa 2000:

Comparing wealth measuring across societies is hard, especially with exchange rate issues, data quality, etc. This global data, for example, uses means instead of medians, and includes home equity, so the numbers don’t compare to the Brandeis study. But the pattern is good to see anyway.

For a more thorough discussion of the global questions, including but not limited to data issues, there is a new book by  Roberto Korzeniewicz and Timothy Moran — a former professor and classmate of mine from Maryland, respectively — called Unveiling Inequality A World-Historical Perspective. I haven’t read it well enough to write my own blurb yet, but here’s the promo page conclusion:

Korzeniewicz and Moran provide strong evidence that the nation where we are born is the single greatest determining factor of how we will live. Too much sociological literature on inequality focuses on the plight of “have-nots” in wealthy nations who have more opportunity for social mobility than even the average individual in nations perennially at the bottom of the wealth distribution scale. Unveiling Inequality represents a major paradigm shift in thinking about social inequality and a clarion call to reorient discussions of economic justice in world-historical global terms.

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How do they do it?

How do families transmit inequality, that is. This is an area where some of sociology’s big ideas are actually being pursued, challenged and tested through empirical studies. I’m always interested when  the answers don’t fit neatly with the authors’ expectations.

The Homemade Graduate Cap activity, from your corporate parenting sponsor

I was inspired to do some more reading after the comprehensive new review titled, “Locating Where the Action Is,” in the British journal Sociology. Sarah Irwin walks through the current state of research on what it is, really, that poor versus middle class families do that helps place their kids in the same class position as their parents. In the theoretical language of today’s stratification research, a lot of this is about “cultural capital,” and ideas from Bourdieu. Chief among these is “habitus,” which is something like: the internalization of social structures encountered through the life course, processed into a practical sense of acceptable action for the individual (I’m paraphrasing a nice short video by Kari Alexander). It’s that sense of entitlement, plus the skills to pull it off – that partly responds to, and partly drives, the reciprocal behavior of gatekeepers along the way.

This research is harder than it looks, for a few reasons. First, it’s not easy to measure something like cultural capital. People have tried everything from a simple measure of the education level of parents, to the number of books or level of high-brow cultural consumption in the childhood home.

Second, as Irwin explains, some behavior – like parents reading to children – doesn’t matter much to rich kids (the odds are with them whether their parents read to them or not), while it does to the poor (those who are read to have a better chance of upward mobility). So, can that explain how the rich stay rich, or is it just something that affects mobility from lower to higher status?

Finally, some researchers have really gotten under the hood of family processes – the most influential of these might be Annette Lareau, whose research led to the popular book Unequal Childhoods. But even the richest of these studies can’t yet prove that the behavior they see causes the outcome we expect. As convincing as Lareau’s evidence is that the nature of parenting differs across the class divide, the data can’t tell us that’s why the rich kids end up richer (or healthier or happier) in the long run.

Naturally, part of what rich people do that poor people can’t is spend money on their kids. They can make other investments, too, such as taking care of their own health or devoting more time to their kids. If the difference is the ability to pay tuition at a decent school or the “whom you know” method of getting a job, we don’t need rocket social science to figure it out. But understanding variation – when the “system” fails to reproduce itself perfectly – is part of how we figure out the system itself.

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Taxing estates, barely

The estate tax may die for a year after all, unless Congress passes an extension tax retroactive to January 1, which would be subject to court challenge. Everyone thought the tax would continue to limp along, after the House voted to extend it another year at the current rate. It was only made to expire so that forecasts for the Bush tax cuts wouldn’t look so bad.

The current federal law exempts the first $3.5 million, making about 1 in 460 deaths taxable, according to the Tax Policy Center of the Urban Institute and Brookings (some states have their own tax). They estimate that, of the $14 billion expected to be raised with the tax this year, 93% would come from the top 5% of people by income.

That $3.5 million exemption is more than 5-times what it was in 2001. Ironically, the tinier the population taxed, the more proponents can champion the tax as “the most progressive” tax we have. On the other hand, the smaller it is, the less efficient it is in terms of the government effort to enforce – an argument used against it by Cato. Or, as a real capitalist might put it, the tax “destroys capital.” The Democrats eeked out a narrow victory, 225-200, to keep it for another year (Senate action is still required).

Of course rich people pass wealth to their children in countless ways while they’re still alive – just as poor people pass on poverty. But inheritance seems especially out of order with respect to the idea of meritocracy or equal opportunity: “No issue gets to the heart of class privilege” quite like it.

Can anyone explain how the idea of equal opportunity can persist in the face of this? Why should children get so much advantage – or disadvantage – they did nothing to earn?

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