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Facts about rich people
In the first Forbes 400 [1982], oil was the source of 22.8 percent of the fortunes, manufacturing 15.3 percent, finance 9 percent, and technology 3 percent. By 2006 oil had fallen to 8.5 percent and manufacturing to 8.5 percent. Technology, however, had risen to 11.75 percent and finance to an extraordinary 24.5 percent.
And get this:
The average net worth in 2006 of Forbes 400 members without a college degree was $5.96 billion; those with a degree averaged $3.14 billion. Four of the five richest Americans -- Bill Gates, casino owner Sheldon Adelson, Oracle's Larry Ellison, and Microsoft cofounder Paul Allen...-- are college dropouts.
Both are from the quite engaging All the Money in the World -- How the Forbes 400 Make -- And Spend -- Their Fortunes, by Peter W. Bernstein and Annalyn Swan.
In inflation-adjusted terms, here are the richest Americans of all time; Bill Gates is #13. Here are graphs on California vs. New York.
Posted by Tyler Cowen on September 17, 2007 at 07:14 AM in Data Source | Permalink
Comments
Since Bill Gates's wealth, at its peak, was $87 billion instead of the present $55 billion, there is clearly a problem with the table of richest Americans. Do they not apply their method to the living?
Posted by: sammler at Sep 17, 2007 7:47:24 AM
"Four of the five richest Americans -- Bill Gates, casino owner Sheldon Adelson, Oracle's Larry Ellison, and Microsoft cofounder Paul Allen...-- are college dropouts."
It would be worth juxtaposing the total income of all college drop-outs in the USA against the total income of all those who attended college to separate out the fallacy of the "College drop-out Billionaire" that appears to be feeding the growing discussions in the blogsphere about how wasteful college education is!
Posted by: Shefaly at Sep 17, 2007 8:18:17 AM
Shefaly, I went through a California State University in the late seventies and early 80's, flirting with a Masters in Computer Science.
Actually, I'll pause for a story about that: In an upper level computer science class, an instructor with a heavy Greek accent said (circa 1982) asked the class "who is here because they want to be rich like Bill Gates? Raise your hand." You know, by upper level classes most students are experienced enough not to raise their hands for anything ... but one person did. The instructor said "Get out of my class!" Everyone was shocked. We thought initially that he was some kind of socialist ;-), but then he said "If you want to get rich like Bill Gates you don't need my class, you just go do it."
Now for me that doesn't say you should do away with the University, but by all that is Holy, the University should have changed by now. It should have gone "virtual" to some degree and required less physical presence for the simple stuff.
(I'm also with those who think some kind of feedback between the college loan industry and academia caused something else entirely to happen.)
Posted by: odograph at Sep 17, 2007 8:42:21 AM
That's a list of wealthiest Americans by percent of total US economy owned, not by inflation adjusted wealth, unless you think that inflation adjusted per-capita GDP has not merely stagnated but has decreased radically.
Posted by: michael vassar at Sep 17, 2007 10:31:39 AM
Interestingly the changes in the wealth shares by industry roughly coincides with the changes in the composition of the s&p 500 over the same era.
Posted by: spencer at Sep 17, 2007 10:49:18 AM
"but by all that is Holy, the University should have changed by now. It should have gone "virtual" to some degree and required less physical presence for the simple stuff."
Why? Do you think there is no benefit to face-to-face instruction? and well-funded laboratories? and interaction with classmates in the learning experience?
Posted by: John Dewey at Sep 17, 2007 11:01:09 AM
Here's the same list of wealthy Americans, presented in a different way.
http://www.nytimes.com/ref/business/20070715_GILDED_GRAPHIC.html#
Posted by: kebko at Sep 17, 2007 11:30:10 AM
@ Odograph: I think it will take more than a few stories to convince me that college education has no value.
I grew up in India; you might know that given India's foeticide and female infanticide rates, that is a statistical miracle and a direct outcome of my parents' education that I did not become a statistic.
I studied engineering (a very male discipline at that time) and an MBA where women were still a minority of 15% or so. Encouraging me to follow all that and backing it will funding, as Indian educated parents do, was essential. Without my parents' education, I may have become those millions whose parents still choose to marry them off in their early teens, without completing even school.
So may be as you say, education should have changed; but I do not think the fashionable trend of down-with-college-education is anything but a simplistic framing of the inability to appreciate one's own privilege (and the throngs of educated immigrants flooding into America).
Oh, and of my own steam and money, I am just finishing a PhD. :-)
And I agree with John Dewey; in an MBA, for instance, much of the value comes from the interaction and the people one goes to school with than from licensed HBS case studies and text materials, which any one can have access to...
Posted by: Shefaly at Sep 17, 2007 11:38:50 AM
Shefaly; "I think it will take more than a few stories to convince me that college education has no value. "
Not sure how anyone can argue against the value of a college education. In the U.S. in 2005, median earnings for graduates of four year colleges was 63% higher than median earnings for men with only a high school education. The gap was only 19% in 1975.
Median earnings of similarly degreed women was 70% higher than median earnings of women with only a high school education. The gap had been only 37% in 1975.
Posted by: John Dewey at Sep 17, 2007 1:05:26 PM
Since most of us reading this, and certainly for those reading this far down on the blog roll, please knock off the attacks on virtualization and distance education as if they are being done without human interaction. Any educational system can be constructed poorly and teaching can be done badly, live or online, but this tired, 1980s, line about removing human contact and interaction from education is unsupported by evidence or common sense.
Regarding Gates and Ellison and skipping college... They didn't skip college-level learning. They simply dropped out of schools. Most high achieving "drop-outs" are from extraordinarily well-educated, disciplined, self-motivated family backgrounds (and have very supportive, protective mother who work or have a professional background according to the research). Several notable high achieving mathematicians, physicists, and business people skip over undergraduate educational systems. We can call them drop-outs, but that's not a good label.
Posted by: The other Eric at Sep 17, 2007 1:35:30 PM
Some people argue that education is socially costly signaling.
Posted by: josh at Sep 17, 2007 1:38:10 PM
@ John Dewey: That was the question I raised too, so I am always as baffled as you are when people make that 'college drop out became billionaire' argument as almost a causal relationship..
@ The Other Eric: I agree with your point. That is exactly what I had asked about the chaps often named as these drop-outs on a discussion on Ben Casnocha's blog:
http://ben.casnocha.com/2007/08/thinking-like-a.html
@ Josh: Probably so, but as one of the commenters in the link here suggests 'never again would the cost of failure be so low'...
Posted by: Shefaly at Sep 17, 2007 2:28:30 PM
http://www.nytimes.com/2007/09/16/magazine/16epidemiology-t.html?pagewanted=1
= http://tinyurl.com/2j6u5x
Having read the New York Times article on medical
research this morning, I am biased to be skeptical of
the research that purports to show that a college
education leads to increased wealth.
Certainly higher incomes and college education are
correlated. But that may not be causation.
John
Posted by: Shakespeare's Fool at Sep 17, 2007 3:53:28 PM
I suspect that Gates and Buffett are incomparably
richer than John D. Rockefeller because their
money can buy things Rockefeller's money could
not. Such as AIDS research and AIDS prevention
programs.
Rockefeller's money could also buy medical
research, but not research of the sophistication
now available.
John
Posted by: Shakespeare's Fool at Sep 17, 2007 4:09:08 PM
Hi guys, didn't check back until just now.
I'd say that the people who answer me argue against things I didn't exactly say. I didn't say college education was worthless, or that face-to-face interaction had no value.
The question is how well the balance is made, and should be made in the future. Has anyone done serious "refactoring" (to borrow from my domain) in university education? Could or should degrees be reduced to "skills for lifelong learning in an information rich environment?"
Or have the loan folks aligned with the tradition folks to ensure that 200 freshmen sit in a single classroom (face to face, but 1:many)?
(I think a lot of the tradition descends from Colleges being islands of knowledge in an information poor environment. Then, you didn't want to leave college too soon, because you were leaving the knowledge behind.)
Posted by: odograph at Sep 17, 2007 4:26:42 PM
"Or have the loan folks aligned with the tradition folks to ensure that 200 freshmen sit in a single classroom "
Right. It's a conspiracy between evil banks and traditionalists. That's what causes profit-seeking corporations to insist on paying the higher salaries that college degrees command.
Posted by: John Dewey at Sep 17, 2007 4:45:02 PM
Would college help you with your reading comprehension there John? Or lifelong learning in an information rich environment?
And I quote:
"Could or should degrees be reduced to 'skills for lifelong learning in an information rich environment?'"
Posted by: odograph at Sep 17, 2007 4:47:12 PM
odograph,
Sorry if I misunderstood you. I thought you were asking if a college education could be reduced from four years to something less. And then suggesting a conspiracy was to blame for that not happening. If that's not what you meant, then you did confuse me.
From what I've observed in the corporate world, firms are now more inclined to demand more than four years of college for high impact, high reward positions, not less.
Posted by: John Dewey at Sep 17, 2007 5:24:02 PM
Sorry, I thought you were picking out "no college" from a post about "different college."
We live in an age when high schools build supercomputer clusters and high schools compete in DARPA challenges. No doubt some companies would rank a 4 year degree before a DARPA win, but not all would.
I don't think we're really explored what a 21st century degree should look like. I'm sure some people motivated can do without the college degree, just as they always have done, but companies will also look for something that certifies a student as proficient in unstructured advanced learning.
How long does it take to learn the core of a field, and then the unstructured advanced learning to advance in it?
Is it more that tradition that makes 4 years "magic" in 2007?
Posted by: odograph at Sep 17, 2007 5:42:05 PM
"How long does it take to learn the core of a field, and then the unstructured advanced learning to advance in it?"
That's a good question. For some fields, four years may no longer be enough.
Demands on accountants have increased. I don't know if more classroom training is appropriate, but I cannot foresee less.
My wife tells me she hasn't used everything she learned in nursing school. But she also admits she couldn't know at 19 years of age that she wanted to be an OR nurse and not a pediatric nurse. A four year program exposed her and somewhat prepared her for several possibilities. I wonder if she would have even taken the OR courses if given the choice 30 years ago.
I wouldn't want engineers building our infrastructure if they had less than the traditional 4.5 year engineering program.
These are the fields I know about. I can't see those core programs being reduced. I guess the humanities requirements could be eliminated. But that's only a tiny part of their programs.
Posted by: John Dewey at Sep 17, 2007 6:35:16 PM
"I wouldn't want engineers building our infrastructure if they had less than the traditional 4.5 year engineering program."
You wouldn't want your infrastructure designed by fresh college graduates either. Speaking from that experience, what you need from school is to understand the principles, and then to learn the systems are in place at the firm you join (in my case emergency room medical diagnostics).
Posted by: odograph at Sep 17, 2007 6:42:06 PM
When showing wealth as a proportion of gdp, how is the informal sector handled? If it's ignored, this would presumably give a big bias towards old wealthy people who lived in a world with a big informal sector.
Posted by: Daniel at Sep 18, 2007 6:53:03 AM
If you look at school as a big test then the value to the individual is large but the value of sending all these people to college may be small or negative.
Also if you are to judge the value of sending all these people to college you need to be sure that you that you take into account that many of the people who did not go to college could not go or where not as motivated as those who went or who where more rebellious than those who went. All of these things make them different than those who go and could cause them to have more success in earning money.
IMHO there is huge waste in sending all these people to college in the age of the internet.
Tongue in cheek: If you want face to face interaction offer to buy Tyler lunch at his choose of place next time you are in the area of GMU, as I intend to. End Tongue in cheek.
Really hire a tutor for a one on one session now and then.
Posted by: Floccina at Sep 18, 2007 9:21:47 AM
"IMHO there is huge waste in sending all these people to college in the age of the internet."
What do you mean when you write "all these people"?
Does anyone really think that degrees in fields such as nursing, microbiology, electrical engineering, mathematics, accounting, agronomy, chemistry, music, geology, physical education, and veterinary science will be learned well without classroom instruction and labs? So what if even 20 percent of classwork could be done via the internet. Why should it? Are you folks arguing against the value of face-to-face interaction?
Posted by: John Dewey at Sep 18, 2007 10:41:23 AM
What do you mean when you write "all these people"?
Over 50% of high school grads now start college.
"Does anyone really think that degrees in fields such as nursing, microbiology, electrical engineering, mathematics, accounting, agronomy, chemistry, music, geology, physical education, and veterinary science will be learned well without classroom instruction and labs? So what if even 20 percent of classwork could be done via the internet. Why should it? Are you folks arguing against the value of face-to-face interaction?"
On the job training, apprenticeship and tutors can cover allot of it. Most people learn more after getting out of school.
IMHO People go to books, the internet, tutors, friends, TV (discover/PBS) and for profit schools to learn things they go to not for profit schools to get credentials. Not for profit schools are all about testing and giving credentials, in fact you can go to them for free and audit classes as long as you just want to learn and do not need the credentials. I think that this is becuase they know what their jobs is. On the other hand it is tragic when people who need credentials go to certain for profit schools.
Posted by: Floccina at Sep 18, 2007 1:12:59 PM
