Ian Wood/Flickr

Inheritance and Inequality

In his book Capital in the Twenty-First Century, Thomas Piketty emphasizes the rising share of inheritances and gifts in household wealth over time. This seems like a shocking revelation, implying ever-rising wealth inequality, but is it correct?

NEW YORK – The buzz over Thomas Piketty’s book Capital in the Twenty-First Century may have subsided somewhat, but the analysis of its conclusions is far from complete. Consider its discussion of inheritance, which emphasizes its rising share in household wealth over time. This seems like a shocking revelation, implying ever-rising wealth inequality. But is it correct?

For many people, inherited wealth evokes moral repugnance. They associate it with the Rockefellers and Vanderbilts, whose great fortunes have supported generation after generation, and more generally with “trust-fund babies,” who inherit so much money that they never have to work.

Critics are right that inheritances and gifts – collectively known as “wealth transfers” – are distributed unevenly. Only about one-fifth of families in the United States in 2007 had ever received a wealth transfer. In general, recipients of any wealth transfer are likely to have larger incomes and to be in a higher wealth class. And the wealthiest young people tend to have wealthy parents and to have received larger wealth transfers than their poorer counterparts.

To continue reading, please log in or enter your email address.

To continue reading, please log in or register now. After entering your email, you'll have access to two free articles every month. For unlimited access to Project Syndicate, subscribe now.

required

By proceeding, you are agreeing to our Terms and Conditions.

Log in

http://prosyn.org/Cfv9nfz;

Cookies and Privacy

We use cookies to improve your experience on our website. To find out more, read our updated cookie policy and privacy policy.