Global wealth is increasingly self-made and short-lived: Report


It’s not just rhetoric, the rich really are getting richer. Since the Great Recession, the net worth of the world’s billionaires has grown from roughly $3 trillion to $5 trillion by 2015. So where is all this wealth coming from? Emerging markets, duh. But that doesn’t mean we are losing out in the States, according to a new report from the Peterson Institute for International Economics.

To better understand the origins of wealth among the extremely rich, the study developed a comprehensive database of the world’s billionaires, taken from data from Forbes’ annual World’s Billionaires list. It begins by noticing a fact that has become a stump-speech topic ever since Occupy Wall Street: “Despite slow global income growth, extreme wealth is increasing rapidly.”

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Most of that wealth is coming from emerging markets, like China. The most interesting piece of the puzzle is how the origins of extreme wealth have changed within the United States in recent decades.

First, the study finds that wealth in the U.S. – and to a large degree abroad – is increasingly self-made and not inherited, with the population of self-made billionaires

The exception is unsurprisingly Europe, where wealth tends to be older and locked into dynastic families.

“In fact, extreme wealth is created and destroyed at a nearly constant rate in the United States, such that the median age of the businesses behind American fortunes is about the same now as in 2001,” the study found.

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Another interesting finding is that over half of all advanced country billionaires in 2014 were U.S. citizens, and that in the U.S., 27 percent of billionaires were working in finance in 2014. That is “significantly more financial sector billionaires as a share of the total billionaire population than Europe (10 percent) or other advanced countries (20 percent).”

So what’s the moral of the story? If you want to make a billion in the U.S., start a hedge fund.

“While the total real net worth of hedge fund billionaires in other advanced economies has stayed more or less constant since 1996 (after accounting for inflation), total US hedge fund wealth ballooned to over $120 billion by September 2015. Over 80 percent of hedge fund billionaires are from the United States.”