If you, like me, have a purely academic fascination with billionaires, check out \”The Origins of the Superrich: The Billionaire Characteristics Database,\” by Caroline Freund and Sarah Oliver, published by the Peterson Institute for International Economics (February 2016, WP 16-1).
Their work is based on a list compiled by Forbes magazine each year from 1996-2015. The 2015 list includes 1,826 billionaires. While it would obviously be unwise to generalize too dramatically based on this miniscule sliver of the world population, it\’s nonetheless interesting to see what the data has to say. Freund and Oliver sum it up this way:
The data show three interesting trends. First, extreme wealth is growing significantly faster in emerging markets than in advanced countries. The rise of emerging-market wealth is the subject of our book using this dataset, Rich People Poor Countries: Th e Rise of Emerging-Market Tycoons and their Mega Firms (Freund 2016). The book shows that there has been a sharp increase in billionaires from emerging markets over the past 20 years, a large and growing share of whom are company founders, creating new and innovative products. Th e emerging-market superrich are no longer concentrated in the resource and politically-connected sectors of the past.
Second, wealth is increasingly self-made, even in the advanced countries. The relatively rapid growth in the number of self-made billionaires and their wealth alleviates some concerns raised by the economist Thomas Piketty about returns to capital growing faster than income, which would cause fortunes to become more concentrated over time if capital remained in the same hands. 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. There is somewhat less dynamism in the other advanced economies, especially Europe, where fortunes are older and aging over time.
Finally, there are marked differences across regions and countries, even within income groups, which offer information about the climate for big business. Among emerging markets, East Asia is home to the large-scale entrepreneur. In contrast, the Middle East and North Africa is the only region where the share of inherited wealth is growing and the share of company founders is falling. Other emerging-market regions fall somewhere in between. … In Europe, inherited wealth still makes up the majority of billionaire wealth, while the growth in US billionaires has been driven by self-made wealth.
Here\’s an illustrative figure showing the source of billionaire-level wealth. In the US, the share of billionaires who inherited their wealth (darkest blue part of the bar) has fallen since 1996, while the share of those attaining billionaire wealth as \”self-made company founders\” and \”self-made financial sector\” have risen substantially. In that latter category, the more detailed US data shows an especially large rise in hedge-fund billionaires. In Europe, a large share of the growth of billionaires has been in \”traded sectors\” of the economy, while in emerging markets, most of the growth of billionaires has been in \”new sectors\” and \”nontraded sectors.\”
Those who are interested in a more systematic exposition about wealth inequality at all levels might begin with \”Piketty and Wealth Inequality\” (February 23, 2015).