The Global Wealth Pyramid 2016
According to the recent Credit Suisse Research Institute's Global Wealth Report, three quarters of global adult population fit into the bottom echelon of the wealth pyramid. The 3.5 billion adults with wealth below 10,000 dollars account for 2.4 percent of global wealth. In contrast, the 33 million millionaires comprise less than 1 percent of the adult population, but own 46 percent of household wealth.
Wealth differences between individuals occur for many reasons. Variation in average wealth across countries accounts for much of the observed inequality in global wealth, but there is also considerable disparity within countries. Those with low wealth are disproportionately found among the younger age groups, who have had little chance to accumulate assets. Others may have suffered business losses or personal misfortune, or live in regions where prospects for wealth creation are more limited. Opportunities are also sometimes constrained for women or minorities. In contrast, many individuals can be found at the other end of the spectrum who have acquired large fortunes through a combination of talent, hard work and good luck.
The wealth pyramid captures these differences.
The Base of the Pyramid
The layers of the wealth pyramid are quite distinctive. The base tier has the most even distribution across regions and countries, but also the most uneven range of personal circumstances. In developed countries, about 20 percent of adults fall within this category. For the majority, membership is either transient – due to business losses or unemployment, for example – or a lifecycle phase associated with youth or old age. In contrast, more than 90 percent of the adult population in India and Africa falls within this range. For many residents of low-income countries, life membership of the base tier is the norm rather than the exception.
In terms of global wealth, USD 10,000 –100,000 is the mid-range band. It covers around 900 million adults who represent a high proportion of the middle class in many countries. The average wealth of this group is quite close to the overall global mean wealth. India and Africa are under-represented in this segment, whereas China's share is disproportionately high. China and India provide an interesting contrast. India accounts for just 3.1 percent of those with mid-range wealth, and that share has changed very little during the past decade. China accounts for 33 percent of those with wealth between USD 10,000 and USD 100,000, ten times the number of Indians, and double the proportion of Chinese in 2000.
The High Wealth Bands
The top tiers of the wealth pyramid – covering individuals with net worth above USD 100,000 – comprised 5.9 percent of all adults at the turn of the century. The proportion rose rapidly until the financial crisis, but has remained quite stable since that time. It currently comprises 8.2 percent of the global total. Regional composition differs markedly from the strata below. Europe, North America and the Asia-Pacific region (omitting China and India) together account for 89 percent of the group, with Europe alone providing 144 million members (36 percent of the total). This compares with just 5 million adult members (1.2 percent of the global total) in India and Africa combined.
The pattern of membership changes once again for the US dollar millionaires at the top of the pyramid. The United States scores high on all three criteria, and has by far the greatest number of millionaires at 13.6 million, or 41 percent of the worldwide total. For many years, Japan held second place in the millionaire rankings– with 13 percent of the global total in 2011. However, the number of Japanese millionaires has fallen, alongside a rise in other countries. a consequence, Japan lost its second place to the United Kingdom in 2014, but bounced back again this year because of exchange rate appreciation. After a drop this year, the United Kingdom falls to third place with 7 percent of millionaires worldwide.
The Wealth Spectrum
The wealth pyramid captures the contrasting circumstances between those with net wealth of a million US dollars or more, and those lower down in the wealth hierarchy. Discussions of wealth holdings often focus exclusively on the top tail. Credit Suisse Global Wealth Report provides a more complete and balanced picture, believing that the base and middle sections are interesting in their own right. One reason is the sheer size of numbers and their political power. However, their combined wealth of USD 35 trillion also yields considerable economic opportunities, which are often overlooked. Addressing the needs of these asset owners can drive new trends in both the consumer and financial industries. China, Korea and Indonesia are examples of countries where individuals have been rising rapidly through this part of the wealth pyramid. India has not shown similar progress to date, but has the potential to grow rapidly in the future from its low starting point.
While the middle and lower levels of the pyramid are important, the top segment will likely continue to be the main driver of private asset flows and investment trends.