Tuesday, January 24, 2017

US Family Wealth Increased From 1989 To 2013 Due To Population Aging And Increased Education

From Congressional Budget Office, "Changes in Family Wealth, 1989 to 2013" January 18, 2017, Presentation by Nadia Karamcheva, an analyst in CBO’s Microeconomic Studies Division, to the Savings and Retirement Foundation in Washington, DC:

Pages 28 and 29 from CBO presentation, with the full slide presentation following the two page excerpt:
Source: CBO, Page 28

Source: CBO, Page 29

Full CBO slide presentation follows:

Older people have more work experience and with greater experience comes higher wages with a benefit of increased savings. Older people also have had more time to accumulate wealth from savings and investments, to benefit from the compounding effect of time from the interest and gains on those savings and investments, and to have more time to pay down debt from their earlier years.

As I mentioned in my earlier posts, "US Income Inequality Is Linked To Education Levels," "Unequal Income Comes From Unequal Education," and "US Income Inequality Is Linked To Education Levels," more education leads to higher incomes.

With the known positive effects of age and education on income and wealth, it is not surprising CBO checked to see the effect of the changes in age and education of the US population from 1989 to 2013.

Wealth inequality increases between 1989 and 2013 were due to increased age and increased education. As long as the US population is increasing in average age and in average education levels, wealth inequality will increase. When and if the US population average age and education level stop increasing, then income and wealth inequality will stabilize and stop increasing.


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