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Stocks A to Z / Stocks B / Berkshire Hathaway (BRK.A)
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Author: DTB   😊 😞
Number: of 12519 
Subject: Re: Should I change how I invest? Confused in the U
Date: 11/25/2024 10:36 AM
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This result demonstrates that upward mobility for the poorest is as-strong as downward mobility for the richest, which I think is exactly what we'd want to see in a merit-based country founded on equal opportunity (not equal outcomes). And I believe this is a far better gauge of the health of opportunity within the US than income inequality metrics.


That is an interesting dimension to this debate.

So we have intra-country vs inter-country (more intra-country disparity, less inter-country disparity as poor nations catch up a bit to rich countries), the importance of after-transfer measures of income (or of spending) as opposed to pre-tax pre-transfer (with less disparity if you count this), more success of the rich and the poor at the expense of the middle, the importance of wealth as opposed to just income (more disparity here), and the fact that income mobility is also important (with young people naturally having less income than older people; age-adjusted GINI would be interesting to do.*)

Just one point - it should come as no surprise that upward mobility for the poorest is as strong as downward mobility for the richest: when we are talking about percentiles, it really can't be otherwise. You can't have previously poor people moving out of the bottom 20 percentile group without having an equal number of previously richer people moving into that group. And for the richest 20 percentile (most of us included, probably), it is unsurprising that there is some downward mobility. After all, if you're in the top 20 percentile, you can only go down, and some people will. And lots of offspring of that top group will not really need to work at getting a lot of income, since they may well inherit a lot of wealth.

It's a complex subject.

*As usual, if I thought of it, someone else did already:

Because of data availability, many researchers are forced to work on cross-sectional distributions of income and wealth. For example, all the frequently used datasets in both the Luxembourg Income Surveys and the Luxembourg Wealth Surveys are crosssectional. This is problematic because both theoretical models and empirical results suggest a strong relationship between age and income and age and wealth holdings (see, for example, Davies and Shorrocks [2000]). Both relationships are firmly established as increasing to a certain midlife age and then decreasing thereafter.1 Hence a snapshot of inequality within a country or other geographical area runs the risk of providing a misleading picture of the differences in lifetime wealth or income of its citizens. Because the income and wealth profiles differ across countries, the inequality ranking of countries may also be affected by differences in transitory income or wealth attributable to 1. The income profile is likely to have its peak earlier than the wealth profile. c ⃝2012 StataCorp LP st0266394 Adjusting for age effects in cross-sectional distributions life-cycle factors. For these reasons, it has long been argued that age adjustments of inequality measures based on cross-section data are necessary (see, for example, Atkinson [1971]).2. https://journals.sagepub.com/doi/pdf/10.1177/15368...
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