The definition of wealth - Part 2
Research has consistently shown that people's perception of their own wellbeing and happiness depends much more on their estimates of wealth relative to other people than on absolute wealth. This also part of why the concept of wealth is usually applied only to scarce economic goods; goods that are abundant and free for everyone provide no basis for relative comparisons across individuals
Even if we think of wealth regarding dollars or money spent, it’s not that straightforward. For some people life’s little luxuries make them feel wealthy.
Wealth is measured in time, not dollars.
Those things don’t save money (although if you use Seated when you go out to dinner and buy certain things with Prime, you can), they save time. When you eat out, you don’t have to decide what to cook, shop for the ingredients, cook, and clean it all up.
A Job
Some people see wealth in terms of prestige rather than dollars. Which job is seen as more prestigious, marriage therapist or elevator installer?
Well, of course, marriage therapist. They went to college, sit in a nice office, and wear a suit.
But the median salary for a marriage therapist is $53,520. For an elevator installer, it’s $68,792. The therapist needs a Master’s or even a Doctorate. That requires years of education and the cost that comes with it, potentially hundreds of thousands of dollars.
An elevator installer drives a truck and carries a toolbox and wears overalls and gets dirty. But this job requires a high school degree (free) and a five-year apprenticeship which is a mix of classroom learning and on the job training which is paid.
wealthy-definition-of-wealth-job
The problem is that the notion that going to college is of utmost importance has been drilled into our heads for so long. People not suited to college or even interested in going, have been going and taking out loans to do it.
But less than half of those who start college finish.
They don’t end up with a degree, but they do end up with student loan debt. Many of those people would have been infinitely more suited to going into a trade, and they would have employers beating down their doors.
70% of construction companies are having trouble filling jobs, and when politicians stop bickering over infrastructure and start fixing it, there will be 68% more job openings in related fields in the next five years than there are people training to fill them.
As robots take over more and more white collar jobs, parents who want the best for their children would be wise to send them to trade school rather than college.
Things
When it comes to rich vs. wealthy, maybe nothing is more indicative of the difference than things. This is Warren Buffett’s house. It’s worth .001% of his total wealth. Remember, housing should be no more than 30% of your income, so WB is doing okay!
Wealth Inequality
Wealth inequality is different than income inequality and is actually worse. This chart illustrates wealth inequality in the U.S.
Graphs of the distribution of family wealth for the years 1963, 1983, and 1016.
In 1963, families toward the top had $6 for every $1 of families in the middle. By 2016, it was $12 to $1. Here’s another fun fact!
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