F. Scott Fitzgerald was right when he said that the "very rich ... are different from you and me.? Judging by the Forbes 400 richest Americans, they are older than the average American (by 12 years), better educated (more than twice as many are college graduates), whiter (95 percent compared with 71 percent for the country as a whole) and, as has been said, they have better teeth. But like the rest of us, the rich have their ups and downs. In 1929 the top 1 percent held a 44 percent share of all personal assets, but by 1976 their share had sunk to 20 percent; in 1998 it was 36 percent. Typically the share held by the rich rises when stock prices appreciate and the price of housing, the preeminent middle-class asset, rises less swiftly--precisely what happened in the 1990s.

The single biggest reason for the spectacular increase in average assets of the Forbes 400 is the growth of electronic technology, based not only in the computer, software and Internet sectors but also in retailing, finance and mass media. In 1998 the Forbes 400 accounted for an estimated 2.6 percent of total personal net worth held by all Americans, compared with 33 percent held by the remaining one million households in the top 1 percent. The 9.2 million households in the next 9 percent held 34 percent, and the bottom 92.3 million households held 31 percent.

Perhaps a more pertinent indicator is financial wealth, which is calculated as net worth less net equity in owner-occupied dwellings and so is a measure of the more liquid assets available. An analysis by economist Edward N. Wolff of New York University showed that the bottom 40 percent of middle-aged householders in 1998 had virtually no financial wealth and thus were exceptionally vulnerable to economic shocks or personal disability. The financial wealth of the middle 20 percent would typically carry them for two to four months. The figures for the next 20 percent and the top 20 percent are, respectively, eight to 18 months and two to seven years.

The measure of wealth used in the chart is net worth--that is, assets such as real estate, securities, businesses, checking accounts and so on, less any debts. Factoring in Social Security and other pensions, however, lowers the shares held by the rich: by one estimate, the top 1 percent in 1992 held 34 percent of personal net worth but only 20 percent of the total when pensions are included.

In 1998, 27 percent of black and 36 percent of Hispanic households had zero or negative net worth, compared with 15 percent of non-Hispanic whites. Inheritance plays a crucial role in wealth disparities: 24 percent of white households in 1998 reported ever receiving an inheritance (average value $115,000 in 1998 dollars) compared with 11 percent of black households (average value $32,000). Blacks? efforts to accumulate wealth have historically also been stymied by inferior access to credit and housing markets.

By Forbes?s estimate, in 2000 there were 590 billionaires worldwide, including nine kings, queens and dictators, plus 13 family fortunes in which multiple heirs participated. The U.S., with about half the total, has been most successful in producing billionaires. For complicated historical and cultural reasons, such as the distinctive American emphasis on individuality, the U.S. taxes the rich far less than most other industrial countries do.
--Rodger Doyle

Based on Forbes?s 2000 tabulations, the 400 Richest Americans and the World?s Richest People. Data used with permission of Forbes.com. Chart also includes data from the Federal Reserve Board?s triennial studies, Survey of Consumer Finance. The Federal Reserve estimates for the top 1 percent group specifically exclude those in the Forbes 400. Figures on chart indicate average wealth in millions of dollars.