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- Center for Household Financial Stability
- The Demographics of Wealth
Essay No. 2: Education and Wealth
The Demographics of Wealth
How Age, Education and Race Separate Thrivers from Strugglers in Today’s Economy
Essay No. 2: Education and Wealth
New research by the Center for Household Financial Stability shows that there’s a strong correlation between education and money. More of the former often leads to more of the latter. However, correlation is not causation—there is no guarantee that more education will lead to more wealth. Many other factors might be in play, such as natural ability, family environment, inheritances and even health. It’s entirely possible that what’s learned in the classroom has much less influence on lifetime earnings and wealth accumulation than most people believe. In fact, your ability, family background, inheritances or health might be responsible for some—perhaps a large part—of your success even if you hadn’t received the education that you did.
These and other connections that may exist between education and wealth are examined in this second essay in our “Demographics of Wealth” series. ( Read the first essay, which looked at the link between race and wealth .) All of the essays are the result of an analysis of data collected between 1989 and 2013 through the Federal Reserve’s Survey of Consumer Finances. More than 40,000 families were interviewed over those years.
For this essay, only those heads of families at least 40 years of age were studied – because by age 40, the vast majority of adults have completed their formal education. These family heads were broken down into four groups: those without a high school diploma; those with only such a diploma, a GED or a vocational/technical certificate; those with exactly a two- or four-year college degree; and those with a bachelor’s degree plus a graduate or professional degree.
Our key findings:
- The median income for those without a high school diploma in 2013 was $22,320, down 1 percent from 1989; for those with such a diploma, etc., $41,190, down 16 percent; for those with a two- or four-year degree, $76,293, down 5 percent; and for those with an advanced degree, $116,265, up 4 percent. (All dollar amounts are adjusted for inflation.)
- When looking at wealth (net worth, or assets minus liabilities), the median in 2013 for those without a high school diploma was $37,766, down 44 percent; for those with such a diploma, etc., $95,072, down 36 percent; for those with a two- or four-year degree, $273,488, up 3 percent; and for those with an advanced degree, $689,100, up 45 percent. (The median wealth levels of the top three groups generally increased until the mid-2000s, after which they declined due to the bursting of the housing bubble and to the Great Recession.)
- Those with more education had stronger balance sheets—more liquidity, a better mix of investments and lower leverage.
- In most categories, women are outpacing men in educational attainment.
- When it comes to race or ethnicity, Asian-Americans have the highest graduation rates at every level of schooling, followed by whites, blacks and Hispanics.
- As for the contributions of successive generations to rising educational attainment, members of Generation X and Generation Y have lifted college-degree levels less than did the Baby Boomers before them.
Read all the essays and watch all the videos in this series »
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Wealth is Power
2 Pages 393 Words
Wealth and power is a metaphor because they have greatly in common yet they don't actually mean indistinguishably.
People, who perceive a wealthy person, can feel a substantial presence among them, and average people have stereotypes of wealthy people owning power, which is actually pretty accurate. Wealth brings fame which brings power. When there is a wealthy person, they have more power than an average person. Think of all the politicians, actors, athletes, corporate businessmen, and others who have much wealth. With their wealth, they have created a type of power that many others, mostly average people, cannot acquire, such as an alluring lifestyle and fortune.
People treat people who are wealthy with a more courteous and pleasant behavior in social areas, such as restaurants. They treat the wealthy a step above the normal people. The wealthy obtain the best table, get a hold of the best waiters and waitresses, and they are given their orders quicker. That is the power that wealthy people encompass compared to the people who are not as wealthy. Wealthy people use their wealth to become the head of a business or politics. If you see all candidates who are running for president and presidents from the past and present, they were all wealthy and with their wealth, they gained power and support of the people. The wealth brought them power. The wealthier that a person becomes, the more breaks the person receives over people who are not as rich. If a person is wealthy, they have the power to hold better lawyers, defense attorneys, and they have a propensity to win a court case more.
Think of O.J Simpson, Ray Lewis, and Kobe Bryant, all wealthy athletes, who were not guilty for their crimes even though if it was another person committing that crime would get incarcerated, due to their power and popularity amongst the people. They have received a special power that wealthy and famous people tend to get. Think
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