Attention Economy


Monday, February 11, 2019

Income versus Wealth – Flow versus Stock Variable

flow variable (e.g. income) is measured for a given period of time whereas a stock variable (e.g. wealth) is measured at a given point in time.

Washington Post piece notes:
Wealth concentration returning to ‘levels last seen during the Roaring Twenties,’ according to new research
“For illustrative purposes, consider a person who owns a $250,000 house with $200,000 in outstanding mortgage debt. She also has $5,000 in her bank account and $25,000 in a 401(k). That person has a net worth of $80,000, a figure derived from the sum of all her assets ($250,000 + $5,000 + $25,000) minus the sum of all her debts ($200,000). That $80,000 puts her close to the national median of household net worth, according to previous research by Edward N. Wolff of New York University.”

The tax code treats all 1 percenters the same. It wasn’t always this way.