Someone should start a program to inoculate future generations of economists against Pikettism by introducing to them to some second and third generation heirs.
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There were some very great fortunes built in the US during the Gilded Age. That's why it was called that. And it was far enough back to yield 4th generation wealth if there was such a thing.
Even if heirs weren't feckless, the US custom of equal inheritance (vs primogeniture) means fortunes get broken up at an exponential rate. 4 generations of 2.5 children = 39.
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If each generation earns market returns on their wealth & takes ~25 years, doesn't it about balance out?
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I’m curious what percentage of investors equal or exceed market returns over 25 years. Also whether inheritors perform above or below the median. I believe multi-generational dynastic wealth exists and is undesirable, but I also believe it’s far less common than imagined.
End of conversation
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Agree in general, but the effect is probably lessened by: - assortative mating - # of children negatively correlated with wealth - stocks significantly outpacing inflation long-term
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So the reproductive rate exceeds the growth rate of capital!
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