Oops! Top 1% Even Richer Than We Thought

By now, everyone knows the wealthiest 1% of Americans have a lot of money. From the Occupy protests to presidential speeches on economic inequality, many Americans recognize inequality as "a fundamental threat to the American Dream," to quote President Obama. A new report from the European Central Bank (ECB) suggests, however, that wealth inequality might be even worse than previously thought. While prior estimates had pegged the top 1%'s share between 30 percent and 34 percent of all wealth in the United States, the actual figure might be closer to 37 percent, writes Philip Vermeulen, a senior economist at the ECB.  That might not sound like a huge difference, but even this revised estimate still might understate the severity of wealth inequality in the United States, Bloomberg reports: “Our knowledge of the wealth distribution is less than perfect,” Vermeulen wrote. “The results clearly indicate that survey wealth estimates are very likely to underestimate wealth at the top.” Richer households have a lower response rate to surveys measuring their assets, so holdings are undervalued, Vermeulen wrote. He uses data from Forbes billionaires lists in his analysis to provide new wealth distribution estimates for the U.S. and nine European nations. The ECB also measured other countries' wealth gaps, and some, such as that of the Netherlands, rose even more significantly. Accounting for billionaires there boosts the estimate to somewhere between 12 and 17 percent, far more than the previous estimate of just 9 percent found by earlier surveys—though still far lower than the United States.