The Inequalities of Income Investment Growth

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In “Economic Elites, Investments, and Income Inequality” from the academic journal, Social Forces, graduate Ph. D student from Ohio State University, Michael Nau presents throughout his study the rise of an additional factor that has evidently influenced the concentration of vast amounts of income among the elite class, income from investments. In this era, the common beliefs were that demography, labor market institutions, and technology were causing the inequality to rise and for the elites to produce this astounding amounts of income. Nau’s findings present how the debate over the incomes of the elites has to be expanded apart from the ‘working rich class’ to also include the income producing wealth. In addition, Nau presents how the…show more content…
Research Methods: The Federal Reserve Board’s Survey of Consumer Finances (SCF) was the study used on this article for its main analysis. This survey dates from the 1992 to 2010, and includes the information of household income, wealth holding, and other financial topics. In addition, the survey includes a subsample of the most affluent households, and groups them into different categories according to their wealth. However, the edge key that makes the SCF better than other surveys is the fact that it has more information when it comes to the different financial situations of the elites. As a result, the SCF is considered by many experts in the field of finance as one of the best sources on the wealth and investment behavior of the citizens in the United States. This SCF survey serves the purpose of being the main method used in this article to test the hypotheses presented by the author. For instance, to test the first hypothesis, “that income concentration at the top was driven by investment gains,” the SCF tracks the top one percent’s investment income. Moreover, to test the second hypothesis, which “top-income households increasingly took on the characteristics and behavior of investors,” the status indicators of a variety of investors had to be defined by measures such as if the household obtains ninety percent of his income from investment or if their financial assets were
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