Erratum: A tale of two (and more) altruists (2021 J. Stat. Mech. 103405)

We introduce a minimalist dynamical model of wealth evolution and wealth sharing among N agents as a platform to compare the relative merits of altruism and individualism. In our model, the wealth of each agent independently evolves by diffusion. For a population of altruists, whenever any agent reaches zero wealth (that is, the agent goes bankrupt), the remaining wealth of the other N − 1 agents is equally shared among all. The population is collectively defined to be bankrupt when its total wealth falls below a specified small threshold value. For individualists, each time an agent goes bankrupt (s)he is considered to be ‘dead’ and no wealth redistribution occurs. We determine the evolution of wealth in these two societies. Altruism leads to more global median wealth at early times; eventually, however, the longest-lived individualists accumulate most of the wealth and are richer and more long lived than the altruists.

Does Bridge Employment Mitigate or Exacerbate Inequalities Later in Life?

This paper explores how gradual retirement impacts inequality later in life, with a focus on transitions from career to bridge employment. We use 26 years of longitudinal data from the Health and Retirement Study to document the various pathways that older Americans take when exiting the labor force, and examine how bridge employment impacts non-housing wealth and total wealth, including the present discounted value of Social Security benefits. We find that gradual retirement in the form of bridge employment neither exacerbates nor mitigates wealth inequalities among Americans who held career jobs later in life. We do find evidence that wealth inequalities grow among the subset of older career workers who transition from career employment to bridge employer at older ages. These findings provide quantitative evidence that bridge employment at older ages is taken by those who need to continue working financially and those who continue working for nonpecuniary reasons.

Layers of Inequality: Unequal Opportunities and Skin Color in Mexico

We document the contribution of skin color toward quantifying inequality of opportunity over a proxy indicator of wealth. Our Ferreira–Gignoux estimates of inequality of opportunity as a share of total wealth inequality show that once parental wealth is included as a circumstance variable, the share of inequality of opportunity rises above 40%, overall and for every age cohort. By contrast, the contribution of skin tone to total inequality of opportunity remains minor throughout.

Wealth Transfers and Net Wealth at Death: Evidence from the Italian Inheritance Tax Records 1995–2016

In this paper we describe a novel source of data on the full record of inheritance tax files in Italy, covering up to 63% of total deceased. The work documents a substantial rise in the total value of inheritance and gifts as a share of national income, from 8.4% in 1995 to 15.1% in 2016. Consistent with the increasing role of total personal net wealth in the economy, the weight of inheritance and gifts in Italy appears relatively high by international standards. Over the same period, total wealth left at death has also become increasingly concentrated. The estates valued at least €1 million were worth 18.7% of total estate in the mid 1990s and 24.8% in 2016. This paper also documents that revenues collected from the inheritance tax underwent a threefold decline from 0.15% to 0.05% of total tax revenue between 1995 and 2016. Data also allow a disaggregated analysis by demographic and geographic characteristics. Stone Center on Socio-Economic Inequality Working Paper)

Just society

I examine the foundations of a just society using the lens of decision theory. The conception of just society is from an individual’s viewpoint: where would I rather live if I have an equal chance of being any individual? Three alternative designs for a just society are examined. These are: laissez-faire, maximin and social minimum. Two assumptions about human nature clarify the distinction among three societies. The first assumption is that a representative individual’s utility function is concave. The second assumption recognizes that redistribution to achieve equality reduces total wealth. A rational individual would prefer a society where one is free to maximize one’s expected utility. A social minimum that includes both the provision of essential human needs and equality of opportunity (education, healthcare, access to capital) for a flourishing life emerges as a candidate solution for the basic structure of society.

Towards Personal Financial Sustainability Based on Human Capital Analysis in Korea

Financial sustainability for individuals has become more important due to the increase in life expectancy. In personalized lifetime financial planning, human capital is critical for incorporating the life-cycle of individuals. This study focuses on human capital modeling based on features such as education level and working industry, and presents how difference in human capital can affect the optimal asset allocation. By analyzing the Korean labor and income panel survey data, fixed effects regression was performed to model human capital and a portfolio model that maximizes utility of total wealth is solved to optimize the lifetime financial plan. The empirical results show that individuals with human capital that are more correlated with stocks are advised to reduce allocation in stocks.