How does the wealth of the poor in Great Britain compare with that in the US?

 

In my last blog I showed how, while the concentration of wealth at the top of the distribution was similar in both the UK and the US, wealth was vastly higher in the US than in the UK. It is often argued, in defence of these very high levels of wealth, that such wealth in the long run benefits all in terms of the jobs and incomes it creates. As I showed in that blog the wealth in the US has been growing far faster than in the UK. So how have the poor fared in both countries in terms, at least, of their wealth?

 In this blog I am going to use two data sources to answer that question. For the US I use the Federal Reserve's data on household wealth, which is primarily from the Financial Accounts of the United States and the Survey of Consumer Finances (SCF). For the UK I use ONS data for total wealth in Great Britain. From both data sources it is possible to derive information on net worth which is the value of total assets less liabilities. The most recent data from the ONS is for 2022 so I provide a comparison across the US and Great Britain for that year.

 While both data sources provide information of net worth across households they do not do so on a similar basis. So that we can compare directly I use a common basis, which consists of three categories – the top 10 per cent, those if the 60^th to 90^th deciles and the bottom 50 per cent. I present the average net worth for these three categories in a common currency which is purchasing power US$.

 Figure 1 below shows the result of this comparison As we would anticipate the top 10 per cent in the US are far richer than the top 10 per cent in Great Britain, about twice as rich on average. What might surprise is that the bottom 50 per cent are far richer in Great Britain than the bottom 50 per cent in the US, about three times richer. It is also the case for those in the 60^th to 90^th percentile that wealth is higher in Great Britain than in the US, although the difference here is only some 13 per cent.

 

In summary when comparing average household wealth in the US with that in Great Britain the bottom 90 per cent in Great Britian have higher average household wealth than the bottom 90 per cent in the US when we do this comparison for 2022. Table 1 below gives the data that underlies the averages shown in Figure 1.

Table1 Net Worth in the US and Great Britain in 2022

 Total Wealth and Wealth per Household in the US

	Total Wealth In trillions US$	Number of households In millions	Wealth per household  in US$
Bottom 50 per cent	3.55	65.601	54,000
Next forty	42.3	52.481	806,000
Top 10 per cent	90.5	13.120	6,898,000
Totals	136.4	131.2	7,758,000
Source: US Federal Reserve Board Data

 

 Table 1 provides the data for both total wealth and per household wealth for the US and Great Britain for the year 2022, which is the most recent year for which a direct comparison is possible. Total wealth is much higher in the US at 136.4 trillion dollars as compared with 13.6 trillion for Great Britain, a ten-fold difference. This, of course, is partly accounted for by the much larger size of the US economy with 131 thousand households compared with 24.7 thousand for Britain. There remain large differences across the economies when we look, in the final column of the Table, at wealth per household. This at US$ 7,758,000 is some nine times higher than the level in Britain at US$ (PPP) 835,916.

It is when we look at the breakdown by the deciles of the population we see how, for some 90 per cent of the population, wealth is higher in Great Britain than in the US. In the case of the bottom 50 per cent wealth is some three times higher in Great Britain than in the US as we have shown in Figure 1. We asked in the title for this blog ‘How does the wealth of the poor in Great Britain compare with that in the US?’ The answer is that it compares very well and looking at overall averages is very misleading.