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The Great Gatsby Curve Article - Inequality and the End of Social Mobility

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The Great Gatsby Curve Article - Inequality and the End of Social Mobility

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'The Great Gatsby Curve': Why It's So Hard for the Poor to Get Ahead - The Atlantic

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'The Great Gatsby Curve': Why It's So Hard for the Poor to Get Ahead - The Atlantic

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The American Dream isn't dead--it just moved to Denmark.

We like to think of ourselves as living a classless society, but it isn't true today. As the Brookings Institution has pointed out, America has turned into a place Horatio Alger would scarcely recognize: we have more inequality and less mobility than once-stratified Europe, particularly the Nordic countries. It's what outgoing Council of Economic Advisers chief Alan Krueger has dubbed the " Great Gatsby Curve" -- the more inequality there is, the less mobility there is. As Tim Noah put it, it's harder to climb our social ladder when the rungs are further apart.

And it's getting worse.

Inequality is breeding more inequality. It's a story about paychecks, marriage, and homework. Now, it's not entirely clear why the top 1 percent have pulled so far away from everyone else, but there's a long list of suspects. Technology has let winners take, if not all, at least most, in fields like music; deregulation has set Wall Street free to make big bonuses off big bets (and leave taxpayers with the bill when they go bad); globalization and the decline of unions have left labor with far less leverage and share of income; and falling top-end tax rates have exacerbated it all. But high-earners aren't just earning more today; they're also marrying each other more. It's what economists romantically call "assortative mating" -- and Christine Schwartz, a professor of sociology at the University of Wisconsin, estimates inequality would be 25 to 30 percent lower if not for it.

Marriage is widening inequality today, and keeping it wide tomorrow. Well-off couples get married more, stay together more, read to their children more, and otherwise have more time and money to spend on their children's education. As the New York Times points out, economists Richard Murname and Greg Duncan have found that high-income couples have poured resources into the educational arms race at a prodigious pace the past generation. For one, the amount of time college-educated parents spend with their kids has grown at double the rate of others since 1975; for another, high-income households invested 150 percent more in "enrichment activities" for their kids from 1972 to 2006, compared to a 57 percent increase for low-income households.

It's paying off. As Jonathan Cohn of The New Republic points out, early cognitive development has long-lasting consequences that can leave less-lucky children behind from the moment they start school -- and keep them there. But even when kids from low-income households do outperform those from high-income households, it's far from a guarantee that they'll end up earning more as an adult. Indeed, Matt Bruenig highlights the chart below from the Pew Economic Mobility Project that shows that rich kids without a college degree are 2.5 times more likely to end up rich than poor kids who do graduate from college.

This chart is a bit hard to follow, but the message isn't: it's hard to rise, and harder to fall in our "meritocratic" society. The red columns show which income quintiles people who didn't graduate from college end up in based on which one they were born into; the blue columns shows the same for college grads. As you can see, there's only a 10 percent chance that a college grad from the bottom quintile will end up in the top quintile, but a 25 percent chance that a non-college grad from the top quintile will stay there.

This is one part obvious and another part mystery. Now, it's no secret that the rich are different from you and me -- they have more money to leave to their kids -- or that they have a special jobs program called "working for dad". Miles Corak, a professor of economics at the University of Ottawa, found that almost 70 percent of the sons of Canada's top 1 percent had worked where their fathers worked. In other words, it's clear enough why so many well-off kids who don't get a college degree stay well-off. But it's less clear why higher education isn't more of a path to prosperity for low-income children.

Well, what kind of higher education are we talking about? As Caroline Hoxby of Stanford and Christopher Avery of Harvard show in a recent paper presented at the Brookings Institute, very few high-achieving students from low-income households end up even applying to a selective college. (Here, "high-achieving" is defined as the top 10 percent of overall test-takers on the SAT I or ACT, and a "selective" college is one of the top 236 schools in the country.) This, of course, is not how high-achieving, high-income students play the college admissions game. They follow their guidance counselors' advice, and apply to a few "reach" schools, a handful of "match" schools, and a "safety" school or two. As you can see in the chart below from Hoxby and Avery, this optimal strategy means applying to schools with median SAT I scores mostly in line with their own, and a few much lower -- say, 20 percentiles or so lower. The clump to the far left, around 95 percentiles lower, are, in this case, largely specialty schools, like art or music academies.

It's a totally different game for high-achieving, low-income students, because nobody tells them how to play it. Aside from magnet school kids, they mostly don't have parents or teachers or counselors with much experience applying to selective colleges. Nor do many know, despite the best efforts of the schools to inform them otherwise, that the most selective colleges have very generous financial aid packages that can take tuition all the way down to zero. Indeed, Harvard is pretty much free, including room and board, for students whose parents make $65,000 or less.

But, again, they either aren't told or don't remember this -- or think other things are more important. Maybe they want to stay close to home to help their parents or be near a significant other. Maybe they just don't believe they could get into a top-tier college. Whatever the reason, the vast majority of high-scoring, low-income students don't apply to selective schools, but opt instead for community colleges or small state schools. As you can see below, there's little concept of applying to "reach", "match" and "safety" schools. And insofar as there is, it's not strategic; applications are pretty evenly distributed across the three groups. Still, that's far better than the mountain of applications to un-selective schools that you don't really need to apply to.

This is how the American Dream ends. Not with a bang, but a whimper of elite school applications by poor kids. Like it or not, the Ivies and other top schools are our conduit to the top, and far too many low-income students who should be there are not. As David Leonhardt of the New York Times points out, only 34 percent of high-achieving, low-income students attend a selective college versus 78 percent for high-achieving, high-income students. This has to be the most boneheaded way we as a society perpetuate the people at the top. The deck is already more than stacked against kids growing up in low-income households -- their parents often aren't as involved or even around -- and we're not helping the ones who do succeed to succeed more.

There is plenty to be done. We can help parents, help parents help their kids, and help kids once it's time to pick colleges. Of course, the first step in any plan to reverse inequality is, simply enough, more redistribution. But not just more redistribution; smart redistribution. Thinking small, something like a bigger Child Tax Credit or Earned Income Tax Credit would give working families a bit more security -- which, regardless of whether people invested it in their children's education, would help their kids.Thinking bigger, something like a universal basic income -- that is, cutting checks to make sure everyone has a minimum income -- would put a floor under low-income households, and, just maybe, could make lower-income men more marriageable. It sounds utopian now, but as Dylan Matthews of the Washington Post points out, it's an idea with a bipartisan heritage: none other than Milton Friedman endorsed the negative income tax.

The second step are smart interventions to help new parents. Actually, President Obama's call for universal, high-quality pre-kindergarten is somewhere in-between these first and second steps. As Jonathan Cohn has chronicled, we know that daycare is a disaster in the U.S. now, and that top-notch pre-K can make lasting impacts, but we don't quite know how to scale that up. It might be that universal pre-kindergarten is less high-quality, and more high-quantity, but even that would help working families' budgets more -- and let parents look for work without having to worry about who will look after their kids. And, of course, it might do much more than that. But it's not just about helping low-income parents juggle their jobs and children; it's about helping them do the things they don't realize they need to do. The Providence Talks program, which the New York Times recently highlighted, could be a good model here: nurses and social workers ask new parents to record all the things they say to their babies to try to get them to talk more and use more words with their infants.

The last step is by far the easiest. It's just giving high school students better information about what colleges match their scores, and what colleges costs what given different family incomes. Right now, high-achieving, low-income students get all kinds of glossy brochures from colleges looking for socio-economic diversity if they send their scores in to the College Board, but it can be hard for them to know where to start or what to trust without much adult guidance. In other words, there's a needed public good we're not providing -- a government site (and maybe mailing list) that clearly shows students what they need to know about different schools to make an informed choice. And it sounds simple -- well, that's because it is -- but schools can help by waiving their application fees for low-income students, and maybe entirely. Fees don't do much to dissuade high-income students from mass applying to schools, but they do stop low-income ones from sending out nearly as many, if any, applications as they should. In other words, stop creating barriers to the students you say you want the most!

Ask anyone about inequality, and you're likely to hear three words in response: education, education, education. Oh, and education. And it's true: school should be the ladder out of poverty. But too often it's not; if anything, the reverse. We need to stop failing early and failing late. In other words, we need to reach kids during those formative years before school begins, and to keep kids who are thriving in high school to keep thriving in the right college.

If we don't, the American Dream will be just that.

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'The Great Gatsby Curve': Why It's So Hard for the Poor to Get Ahead

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The American Dream isn't dead--it just moved to Denmark. We like to think of ourselves as living a classless society, but it isn't true today. As the Brookings Institution has pointed out, America has turned into a place Horatio Alger would scarcely recognize: we have more inequality and less mobility than once-stratified Europe, particularly the Nordic countries.

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U.S. inequality keeps getting uglier - Dec. 22, 2016

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U.S. inequality keeps getting uglier - Dec. 22, 2016

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Inequality in America is getting worse.

The gap between the "haves" and "have nots" is widening, according to the latest data out this week.

The rich are money-making machines. Today, the top mega wealthy -- the top 1% -- earn an average of $1.3 million a year. It's more than three times as much as the 1980s, when the rich "only" made $428,000, on average, according to economists Thomas Piketty, Emmanuel Saez and Gabriel Zucman.

Meanwhile, the bottom 50% of the American population earned an average of $16,000 in pre-tax income in 1980. That hasn't changed in over three decades.

As if that's not depressing enough, living the American Dream is also getting harder to do.

Millennials, born in the 1980s, only have a 50% likelihood -- a coin toss chance -- of earning more money than their parents did, according to new research released this month from the Equality of Opportunity Project.

It wasn't always this way. In the 1940s, almost everyone in America grew up to be better off financially than their parents. While money isn't the only definition of success, more wealth typically leads to bigger houses, grander vacations, fancier cars and more opportunities to advance.

"Children's prospects of achieving the 'American Dream' of earning more than their parents have fallen from 90% to 50% over the past half century," the researchers wrote in their report.

Related: Trump's new plan to save jobs

Wealthy taking a bigger piece of 'pie'

The wealthy didn't always take such a big share of the proverbial "pie." In the 1970s, a decade generally seen as fairly prosperous, the top 1% of Americans earned just over 10% of all U.S. income (i.e. the "pie").

Over time, the rich became more lucky -- or more greedy. Today the top 1% take home more than 20% of all U.S. income.

As the wealthy earned more, someone else in America had to get less. The bottom 50% went from capturing over 20% of national income for much of the 1970s to earning barely 12% today.

The turning point started around 1980, as seen in the graph below. By the mid-1990s, the fortunes of the top 1% were clearly on the rise and those of the bottom half were declining rapidly.

Related: Elizabeth Warren watchdog under siege

Wages aren't going up for bottom 50%

The Great Recession hit everyone hard. While job losses hit the bottom half, the tanking of the stock market and the sharp drop-off in home and property values caused the wealth of the top 1% to also fall dramatically.

Around 2009 and 2010, inequality narrowed slightly because the rich had lost a lot of wealth.

But since then, inequality has grown and is on track to widen further. The wealthy have recovered far faster as the stock market has surged over 230% since bottoming out in March 2009 and property values have shot back up to pre-recession levels.

In the meantime, wages for the bottom aren't moving.

The U.S. tax system is supposed to help the poor. Yet even after-tax income shows that the bottom 50% averaged just $25,000 a person in 2014, according to the latest data. That's just a touch above the $20,000 someone in the bottom half earned way back in 1974 (after adjusting for inflation).

"Income has boomed at the top: in 1980, top 1% adults earned on average 27 times more than bottom 50% adults, while they earn 81 times more today," write Piketty, Saez and Zucman.

CNNMoney (New York) First published December 22, 2016: 2:14 PM ET

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The gap between the "haves" and "have nots" is widening, according to the latest data out this week. The rich are money-making machines. Today, the top mega wealthy -- the top 1% -- earn an average of $1.3 million a year.

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Millennials Are Still Struggling to Find Jobs - The Atlantic

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Millennials Are Still Struggling to Find Jobs - The Atlantic

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A soft economy and rising student debt are just two factors that Americans say make things more difficult for today's young adults.

Marcelo del Pozo / Reuters

Overall, fully 78 percent of adults agreed that "compared to earlier generations ... it is currently harder" for young people today "to get started in life." Just 16 percent of those surveyed thought it was easier for young people to get started today.

Lily Isenstein / National Journal

The latest Heartland Monitor Poll offers a detailed look at what Americans consider the path to success in today's economy. The results, which National Journal and The Atlantic will report in a series of stories over the next two weeks, examines the decisions that those just starting out in life believe will take them to their goals-and how that map differs from the course that earlier generations followed.

To compare attitudes across generations, the poll divided respondents into two broad groups-a younger cohort that qualifies as still starting out, and an older cohort that has passed that initial stage of life. The poll defined the younger cohort as all adults aged 18 to 24, as well as the nearly three-quarters of those aged 25 to 29 who identified themselves as "still 'getting started in life,'" after responding to questions about what constituted that initial stage of experience. The poll defined the older cohort as the remaining roughly one-quarter of 25- to-29-year-olds, plus all respondents over 30.

In these stories, we will describe those whom the poll identified as still starting out as the younger group (or cohort) and those who have passed that stage as the older group.

Both the younger and older groups largely agreed in the poll on the definition of starting out -and on the thresholds that mark the end of that stage in life. The two groups also largely converged on the greatest challenges young people face today in getting started, though with slightly differing emphasis.

Among the younger group, 37 percent said the biggest obstacle facing those starting out today is money and their personal budget, followed by 25 percent who picked education, 20 percent who identified work and career, and 11 percent who pointed to relationships and family. The older cohort ranked the challenges facing those starting out today in the same order, though they divided about equally between budget, education, and career atop the list.

Older and younger adults separated somewhat more when asked to compare the challenges facing those starting out today with those that confronted earlier generations. Young people consistently offered a somewhat more optimistic assessment of their prospects than older people did. But in both groups, clear majorities thought those getting started now face a rockier path than their predecessors.

Asked to assess the opportunity for those getting started today to "manage personal finances and control debt," just 16 percent of older respondents said it was easier for young people today than for previous generations, while 76 percent said it is harder. Younger people were considerably more optimistic, but even so, only 31 percent said it was easier for them to manage money than for earlier generations, while 65 percent said it was tougher.

Looking specifically at younger people still starting out, the survey found relatively few demographic differences along lines of race or gender in their assessments of these challenges. (One exception: Whites were considerably more likely than nonwhites to say that it was tougher overall for young people to get started today.) But one experience clearly split the younger cohort: The substantial 45 percent of younger people with student loans were consistently more downbeat than the 55 percent without them.

Those in the younger group who are holding student debt were considerably more likely than those without such debts to say that it was tougher overall for young people to get started today. While 32 percent of younger people without such debts said it was easier for those starting out today, only 22 percent of those with student loans agreed; fully 75 percent of the younger group with loans said it was tougher to get started, compared to 63 percent of those without them.

Those in the younger group with loans were also more likely than those without them to say it was tougher today to manage personal finances and control debt, and to describe it as tougher to start a family. The weight of student-loan debt may be one reason for the surprising finding that those in the younger group with college degrees were actually slightly more likely than those without them to say that it was tougher overall to get started today.

Debts loomed as a prime concern for many of the young people contacted in follow-up interviews. "I'm trying to be responsible and pay for my schooling [debts] while I'm working," said Kayla Matulka, a 22-year old who works for the city attorney's office in Lincoln, Nebraska. "Budgeting is a big thing for me." Steiner, similarly, has his debts firmly in mind as he contemplates his career after school. "When I get a job, I hope to be able to pay off those student loans as soon as possible."

Despite these pervasive challenges, the poll also found continuing evidence of the personal optimism and resilience that previous Heartland polls and other surveys have identified as a defining millennial-generation characteristic. In the new survey, the younger group was more likely than the older cohort to say they believe they have more opportunity to advance than their parents did-though that contrast may reflect social changes as much as economic trends.

Overall, 50 percent of the younger group said they have "more opportunity to get ahead" than their parents did at the same age, while only 28 percent said they had less, and 22 percent viewed their opportunities as equivalent. Among the older group, only 40 percent thought they had more opportunity, while 29 percent thought they had less opportunity and 27 percent the same.

More From

But in that younger group, women (58 percent) were much more likely than men (42 percent), and minorities (62 percent) far more likely than whites (41 percent), to say they had more opportunity than their parents. (Among younger white men, just 31 percent thought they had more opportunity than their parents, while 39 percent thought they had less.) That suggests the younger group's relatively greater optimism may be rooted more in assessments of falling workplace racial and gender barriers than broader views about the economy's trajectory.

The power of those social shifts was evident to many older respondents too. Sherri Hinnant, a 56-year-old teacher in Marion, Virginia, says that young women today have many more options than she did at their age. "I was the first person in my family to even graduate from high school, much less go to college and get a postgraduate degree," she said. "It was expected for women to get married right out of school. Nowadays, that pressure isn't put on kids. They can do what they want to do; they're not expected to fit into a cookie-cutter mold."

In another measure of optimism, those in the younger group were slightly more likely than older respondents to believe that their own efforts would matter more than broad trends beyond their control in determining whether they get ahead. While one-fourth of older respondents said the state of the economy (15 percent) or government policy (10 percent) would most determine their opportunities, just 14 percent of the younger group picked either of those options. Almost exactly two-thirds of the younger group picked either their educational background (36 percent) or "own skills and hard work" (30 percent). Among the older group, a slightly smaller three-fifths picked those personal characteristics.

In what could be a signal of growing concern about the opportunity for upward mobility, though, noticeable segments of the younger group also cited two other factors in determining individuals' success: their income level (10 percent) and racial background (8 percent). Combined, only 8 percent of the older group picked those two options. Strikingly, though, minorities in the younger group were no more likely than whites to pick race as the key factor in success and even less likely than whites to identify income. Instead, younger minorities were more likely than their white peers to point to education as the key to their personal success.

Janie Boschma contributed reporting to this article

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Everybody Agrees, It's Harder to Get Started Professionally Than It Used to Be

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A soft economy and rising student debt are just two factors that Americans say make things more difficult for today's young adults. Overall, fully 78 percent of adults agreed that "compared to earlier generations ... it is currently harder" for young people today "to get started in life."

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If the American dream is defined as earning more money than your parents, today's young adults are just as likely to have a nightmare as they are to achieve their dream.

Only 50% of people born in the 1980's are making more than their parents, compared to 90% of children born in 1940, according to a new study by researchers at Stanford University, Harvard University and the University of California-Berkeley.

The study concludes that income inequality is the primary reason why many young people are left behind. Slower rates of economic growth are a secondary factor, according to the findings.

"These results imply that reviving the 'American Dream' of high rates of absolute mobility would require economic growth that is spread more broadly across the income distribution," the researchers concluded.

Upward income mobility is diminishing more rapidly for certain regional populations and demographics. The study notes the largest declines are concentrated "in the industrial Midwest states such as Michigan and Illinois," where high-paying manufacturing jobs have declined considerably.

By contrast, of the 50 states South Dakota and North Dakota are holding up better than the rest. South Dakotans and North Dakotans born in 1980 are 62.3% and 59.4% as likely to make more than their parents.

Overall, young men's prospects are worsening at a quickening pace than young women's. Sons born in 1984 are only 41% likely to earn more than their fathers, compared to 95% of sons born in 1940.

Still, they're better off than daughters born in 1984, who are only 26% likely to earn more than their fathers, down from 43% of daughters born in 1940. The study did not compare daughters to their mothers.

If current income distribution was equivalent to the breakdown for the 1940 generation, then 80% of today's young adults would be earning more than their parents.

Alternatively, if gross domestic product had maintained the torrid rates of their parents' generation, 62% of people born in 1980 would be earning more than their parents.

"The key point is that reviving the 'American Dream' of high rates of absolute mobility would require more broadly shared economic growth rather than just higher GDP growth rates," the study concludes.

The study was conducted by Raj Chetty and David Grusky of Stanford, Maximilian Hell and Nathaniel Hendren of Harvard, and Jimmy Narang of Berkeley.

Follow USA TODAY reporter Nathan Bomey on Twitter @ NathanBomey.

Read or Share this story: http://usat.ly/2h53W2N

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CLOSE If the American dream is defined as earning more money than your parents, today's young adults are just as likely to have a nightmare as they are to achieve their dream.

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World's 8 Richest Men Are as Wealthy as Half the World's Population | Fortune.com

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World's 8 Richest Men Are as Wealthy as Half the World's Population | Fortune.com

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Just eight individuals, all men, own as much wealth as the poorest half of the world's population, Oxfam said on Monday in a report calling for action to curtail rewards for those at the top.

As decision makers and many of the super-rich gather for this week's World Economic Forum (WEF) annual meeting in Davos, the charity's report suggests the wealth gap is wider than ever, with new data for China and India indicating that the poorest half of the world owns less than previously estimated.

Oxfam, which described the gap as "obscene," said if the new data had been available before, it would have shown that in 2016 nine people owned the same as the 3.6 billion who make up the poorest half of humanity, rather than 62 estimated at the time.

In 2010, by comparison, it took the combined assets of the 43 richest people to equal the wealth of the poorest 50%, according to the latest calculations.

Inequality has moved up the agenda in recent years, with the head of the International Monetary Fund and the Pope among those warning of its corrosive effects, while resentment of elites has helped fuel an upsurge in populist politics.

Concern about the issue was highlighted again in the WEF's own global risks report last week.

"We see a lot of hand-wringing - and clearly Trump's victory and Brexit gives that new impetus this year - but there is a lack of concrete alternatives to business as usual," said Max Lawson, Oxfam's head of policy.

"There are different ways of running capitalism that could be much, much more beneficial to the majority of people."
SUPER-CHARGED CAPITALISM
Oxfam called in its report for a crackdown on tax dodging and a shift away from "super-charged" shareholder capitalism that pays out disproportionately to the rich.

While many workers struggle with stagnating incomes, the wealth of the super-rich has increased by an average of 11% a year since 2009.

Bill Gates, the world's richest man who is a regular at Davos, has seen his fortune rise by 50% or $25 billion since announcing plans to leave Microsoft (msft) in 2006, despite his efforts to give much of it away.

While Gates exemplifies how outsized wealth can be recycled to help the poor, Oxfam believes such "big philanthropy" does not address the fundamental problem.

"If billionaires choose to give their money away then that is a good thing. But inequality matters and you cannot have a system where billionaires are systematically paying lower rates of tax than their secretary or cleaner," Lawson said.

Oxfam bases its calculations on data from Swiss bank Credit Suisse and Forbes. The eight individuals named in the report are Gates, Inditex founder Amancio Ortega, veteran investor Warren Buffett, Mexico's Carlos Slim, Amazon boss Jeff Bezos, Facebook's Mark Zuckerberg, Oracle's Larry Ellison and former New York City mayor Michael Bloomberg.

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The World's 8 Richest Men Are Now as Wealthy as Half the World's Population

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Just eight individuals, all men, own as much wealth as the poorest half of the world's population, Oxfam said on Monday in a report calling for action to curtail rewards for those at the top.

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The richest 10% hold 76% of wealth - Aug. 18, 2016

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The richest 10% hold 76% of wealth - Aug. 18, 2016

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The rich are still getting richer in the U.S., with the wealthiest 10% controlling three-quarters of all family wealth in the country.

U.S. family wealth totaled $67 trillion in 2013.

But slices of that pie were far from equal, according to a report released Thursday from the Congressional Budget Office.

The top 10% of families -- those who had at least $942,000 -- held 76% of total wealth. The average amount of wealth in this group was $4 million.

Everyone else in the top 50% of the country accounted for 23% of total wealth, with an average of $316,000 per family.

That leaves just 1% of the total pie for the entirebottom half of the population.

The average held was $36,000 for families that fell in the 26th to 50th percentiles. But if they fell in the bottom quarter, they had zero wealth and in fact, were $13,000 in debt on average, CBO found.

Age and education made a difference in wealth accumulation.

Not surprisingly, wealth was higher for households headed by someone 65 or older. Median wealth for these families was $211,000, or almost three-and-a-half times higher than the median for households run by someone 35 to 49.

Families run by adults with college degrees, meanwhile, had a median wealth of $202,000, or nearly four times that of families headed by someone who only had a high school diploma.

What a difference 25 years made

Changes in wealth over time was also very uneven across groups.

Families at the 90th percentile saw their wealth grow by 54% between 1989 and 2013.

Those at the 50th percentile only experienced a 4% rise during the same period.

And those at the 25th percentile actually saw their wealth drop by 6%.

Related: The top 1% haven't captured all income gains

What's more, the top tenth of families saw their share of the total wealth pie grow from two-thirds to more than three quarters over the 25-year period, while everyone else saw their slice shrink.

What was measured

The CBO analysis looked at what it called "marketable wealth," which are assets that are easily traded and have value after someone's death (e.g., real estate, stocks, bank accounts, 401(k)s and equity in a business). From those assets it subtracted nonmortgage debt (e.g., credit cards, auto and student loans).

Much political discussion has focused on income inequality. Income is critical but it is not the only part of the wealth equation. The recession from 2007 to 2009, which hit investment and real estate values hard as well jobs, took a bite out of everyone's wealth.

"During and after the recession, wealth declined for all groups, and by 2013 no group had regained its prerecession level," the CBO noted.

But those at the top saw their wealth decline the least -- by 7% between 2007 and 2013, compared to percentage losses that were three to six times greater for everyone else.

CNNMoney (New York) First published August 18, 2016: 6:50 PM ET

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U.S. family wealth totaled $67 trillion in 2013. But slices of that pie were far from equal, according to a report released Thursday from the Congressional Budget Office. The top 10% of families -- those who had at least $942,000 -- held 76% of total wealth.

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Money can buy happiness, but only to a point

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Money can buy happiness, but only to a point

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They say money can't buy happiness. Of course, they're wrong.

A substantial body of economic research says otherwise: Statistically speaking, household income is strongly related to both emotional well-being and a person's evaluation of their own quality of life.

Will getting a raise this season make you less nervous, stressed or sad? It depends on how much you're already making, according to a recent study from an economist at the Weatherhead School of Management at Case Western University.

Each dollar makes a big difference in reducing negative emotions for people in the 20th income percentile, but those returns fall off by the 80th income percentile and disappear at around $200,000, according to the study.

The paper looked at the level of negative emotion reported by participants in the Panel Study of Income Dynamics - a long-running longitudinal survey of thousands of Americans. People were asked how often they experienced negative feelings like nervousness, hopelessness or restlessness in the last 30 days (K9 scores).

Previous studies have found a correlation between money and happiness, but the Case Western study used the data on individuals over time to demonstrate that income can cause a reduction in negative emotions. It also found that an increase in income can reduce the incidence of serious mental illness (defined as a score of 10 or higher).

"We know from the results that changes in family income are important drivers of people's emotional lives," said David Clingingsmith, the author of the paper and an associate professor of economics at the Weatherhead School of Management. While it may also be true that having high anxiety or sadness could lead to lower income, the study shows that that's not the whole story, said Clingingsmith.

The difference the marginal dollar makes in reducing negative emotions starts to fall off around $70,000, is very low by $160,000 and hits zero around $200,000.

Those results are remarkably similar to the correlations reported in a 2010 study that found that people don't get happier after $75,000 a year.

That study analyzed data from the Gallup Organization in the Gallup-Healthways Well-Being Index (GHWBI). It's a lower number because researchers in that case used a single person's income rather than the family income used by Clingingsmith.

While the 2010 study found that three different measures of positive emotion (or lack of negative emotion) saw rapid improvement that slowed to nothing around $75,000, it also looked at a fourth metric that continued to rise far after that point.

That metric was "life evaluation" - a scale that asks the respondent to rate his or her life from 0, "the worst possible life for you," to 10, "the best possible life for you." It can be thought of as a measurement of how a person judges the success of their own life, rather than the feelings they experience while living it.

That measure seems to be more sensitive to socioeconomic status, the authors noted. People naturally compare their lives and incomes to others', and even if they experience no negative emotions they may yearn for and be more satisfied with higher pay far beyond the level they would need to avoid pain or afford leisure.

"That comparison between yourself and other people is really important for one's sense of well-being," said Clingingsmith. "If I'm a trader and making $300,000 at a firm where everyone else is making $450,000, that may feel different."

So why do these studies matter? In one sense, people already know that their happiness is related to their income, but the details of how exactly that relationship works are important.

Income is often used as a convenient proxy for well-being in economics, but not every dollar of income has the same end effect. If the marginal dollar means nothing for the emotional well-being of an extremely wealthy person, but has a huge effect for a poorer person, then taking $1,000 from the top percentile and giving it to the lowest percentile will have a large net effect on happiness, based on these findings.

"A little bit of marginal taxation doesn't hurt people who are up high as much as it benefits those down low through redistribution or spending on programs," said Clingingsmith.

And for individual people, learning more about the relationship between income and happiness could help them find their own personal sweet spot - where income leads to life satisfaction without requiring additional sacrifices. There's still a lot of economics work that needs to done to fully understand that relationship.

"We earn income because there are things we want to do - we want to live our lives, support our families, have experiences and so forth," said Clingingsmith. "We need to keep in mind what people's ultimate ends are for the things they are striving to do, and what this paper shows is it's not as straightforward as you might think."

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Money can buy happiness, but only to a point

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They say money can't buy happiness. Of course, they're wrong. A substantial body of economic research says otherwise: Statistically speaking, household income is strongly related to both emotional well-being and a person's evaluation of their own quality of life. Will getting a raise this season make you less nervous, stressed or sad?

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Want more charts like these? See our charts on the secrets of the jobless recovery, the richest 1 percent of Americans, and how the superwealthy beat the IRS.
How Rich Are the Superrich?

A huge share of the nation's economic growth over the past 30 years has gone to the top one-hundredth of one percent, who now make an average of $27 million per household. The average income for the bottom 90 percent of us? $31,244.

Note: The 2007 data (the most current) doesn't reflect the impact of the housing market crash. In 2007, the bottom 60% of Americans had 65% of their net worth tied up in their homes. The top 1%, in contrast, had just 10%. The housing crisis has no doubt further swelled the share of total net worth held by the superrich.

Winners Take All

The superrich have grabbed the bulk of the past three decades' gains.

Out of Balance

A Harvard business prof and a behavioral economist recently asked more than 5,000 Americans how they thought wealth is distributed in the United States. Most thought that it's more balanced than it actually is. Asked to choose their ideal distribution of wealth, 92% picked one that was even more equitable.

Capitol Gain

Why Washington is closer to Wall Street than Main Street.

Congressional data from 2009. Family net worth data from 2007. Sources: Center for Responsive Politics; US Census; Edward Wolff, Bard College.

Who's Winning?

For a healthy few, it's getting better all the time.

YOUR LOSS,THEIR GAIN

How much income have you given up for the top 1 percent?

WANT MORE CHARTS LIKE THESE?

See our charts on the secrets of the jobless recovery, the richest 1 percent of Americans, and how the superwealthy beat the IRS. Some samples:

YOU HAVE NOTHING TO LOSE BUT YOUR GAINS

Productivity has surged, but income and wages have stagnated for most Americans. If the median household income had kept pace with the economy since 1970, it would now be nearly $92,000, not $50,000.

Sources
MEET THE ELITE

ONLY LITTLE PEOPLE PAY TAXES
Household income/i ncome share: Congressional Budget Office

Income distribution: Emmanuel Saez (Excel)

Net worth: Edward Wolff (PDF)

Real vs. desired distribution of wealth: Michael I. Norton and Dan Ariely (PDF)

Net worth of Americans vs. Congress: Federal Reserve (average); Center for Responsive Politics (Congress)

Your chances of being a millionaire: Calculation based on data from Wolff (PDF); US Census ( household and population data)
CEO vs. worker pay: Economic Policy Institute
Member of Congress' chances: Center for Responsive Politics
Read also: More Mother Jones charty goodness: How the rich get richer; how the poor get poorer; Kevin Drum on the decline of Big Labor, the rise of Big Business, and why the Obama era fizzled so soon.
Wealthiest members of Congress: Center for Responsive Politics

Wall street profits, 2007-2009: New York State Comptroller (PDF)

Unemployment rate, 2007-2009: Bureau of Labor Statistics

Home equity, 2007-2009: Federal Reserve, Flow of Funds data, 1995-2004 and 2005-2009 (PDFs)

Historic tax rates: Calculations based on data from The Tax Foundation

Federal tax revenue: Joint Committee on Taxation (PDF)

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Want more charts like these? See our charts on the secrets of the jobless recovery, the richest 1 percent of Americans, and how the superwealthy beat the IRS. Congressional data from 2009. Family net worth data from 2007. Sources: Center for Responsive Politics; US Census; Edward Wolff, Bard College.

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