I recently came across a bunch of articles about the latest study on millionaires. Apparently, researchers surveyed 10,000 millionaires and discovered some amazing facts, such as:
Seventy-nine percent did not receive any inheritance at all from their parents or other family members.
US millionaires worked, saved and invested for an average of 28 years before hitting the million-dollar mark.
Nearly three-quarters of the millionaires have never carried a credit card balance in their lives.
The overwhelming majority (79%) did not receive any inheritance from their parents or other family members.
Not only that, 80% come from families at or below middle-income level and just 2% surveyed said they came from an upper-income family.
Almost two-thirds graduated from public colleges.
Plus, 93% of millionaires use coupons all or some of the time when shopping!
Ok, the last one gave me pause, so I did a little independent research and it turns out that affluent households do use coupons a lot, assuming one can trust the stats provided by coupon peddlers. Which got me thinking: who’s behind this latest research on millionaires? Turns out it’s a well-known investment advisor, who contracted out the survey to a third party research outfit. That’s ok, but what research outfit? What was their methodology? What questions did they ask? Was it an “opt-in” internet survey or a random sampling of millionaires that interviewers contacted directly? And so on. I don’t know the answers to any of these questions, because no information was provided on the financial advisor’s website or in any of the articles about the study.
Not that these survey results are implausible. Plenty of peer-reviewed studies have revealed today’s millionaires to be frugal, hard-working, and mostly from middle-class backgrounds. They buy boring cars. They’re diligent savers. This is not new information - twenty years ago academics Thomas Stanley and William Danko found that 80% of US millionaires were first-generation rich. That is, they did not inherit their wealth. Same goes for the super-rich, who are much less likely these days to have come from old money than before, per economists Steven Kaplan and Joshua Rauh, who looked at the backgrounds of the 400 wealthiest Americans over three decades. No wonder Republican candidates can no longer count on the votes of the very wealthy.
Nor are the wealthy necessarily rich in income. For instance, one study of 4,000 millionaires found their median annual income was between $100,000-$149,999. That means half of these millionaires make less than $100,000 a year - not much different than what I found from pouring over US Census data on households with net assets of $500,000 and over*:
* This was the highest wealth category used by the Census Bureau. The median net worth of this group was $929,000, so almost half were millionaires.
Links and References:
Democrats are replacing Republicans as the preferred party of the very wealthy by Lee Drutman June 3, 2016 https://www.vox.com/polyarchy/2016/6/3/11843780/democrats-wealthy-party
Donnelly, Grant Edward, Tianyi Zheng, Emily Haisley, and Michael I. Norton. "The Amount and Source of Millionaires' Wealth (Moderately) Predicts Their Happiness." Personality and Social Psychology Bulletin 44, no. 5 (May 2018): 684–699.
Kaplan, Steven N. and Joshua D. Rauh. 2013. "Family, Education, and Sources of Wealth among the Richest Americans, 1982-2012." American Economic Review, 103 (3): 158-62. https://www.aeaweb.org/articles?id=10.1257/aer.103.3.158
The National Study of Millionaires by Chris Hogan January 7, 2019: https://www.daveramsey.com/research/the-national-study-of-millionaires
Thomas J. Stanley and William D. Danko The Millionaire Next Door, Gallery Books (October 1, 1998) ISBN-13: 978-1563523304
Wealth, Asset Ownership, & Debt of Households Detailed Tables: 2014 U.S. Census Bureau, Survey of Income and Program Participation, 2014 Panel, Wave 2 https://www.census.gov/data/tables/2014/demo/wealth/wealth-asset-ownership.html