Billionaire hedge fund manager Mike Novogratz says earning $32,000 annually puts you in the 1%. That's wildly false.
Michael Novogratz knows a lot about money. The billionaire businessman was once a partner at Goldman Sachs. Then he was a hedge fund manager at Fortress Investment Group. Now he’s the CEO of Galaxy Digital, a cryptocurrency investment group.
But he got his facts about money embarrassingly wrong on Twitter Friday.
Novogratz tweeted the shocking claim that making just $32,000 annually puts you in the top 1% of income earners globally. While that would certainly put things in perspective if it were true, the world is not actually that poor.
When someone expressed their disbelief in the shocking claim, Novogratz dug in his heels. He insisted that most of the world “doesn’t make too much.”
But he didn’t cite a source for his global income claim in the original tweet or his follow up reply. So where is he getting his information from?
Reviewing the top search results for statistics on global income percentiles, it seems that Novogratz got his incorrect figures from a website called GlobalRichList.
It lets you enter your annual income and tells you your global percentile. GlobalRichList claims earning $32,000 a year makes you the 61,909,966th richest person on earth. It doesn’t make it clear whether that’s $32,000 in individual or household income. The U.S. Census bureau’s income percentile tables are based on household income. GlobalRichList merely says N-th “richest person” on earth by income, and claims:
You’re in the top 1.03% richest people in the world by income.
But GlobalRichList doesn’t cite any source for its data either. Some number crunchers on a six-year-old Reddit thread point out that U.S. Census data on income contradicts this website’s readouts.
StasticalAtlas.com, which presents data from the U.S. Census Bureau, says an annual income of $111,900 puts you in the 80th percentile or the top 20% of U.S. households.
By rough estimates, it still seems plausible that making a little less than a third of that could put someone in the top 1% worldwide. But if you enter $111,900 into GlobalRichList, it says you’re in the top 0.08% of income earners worldwide and that only 4,557,881 make this amount or more.
The U.S. population was 309 million in 2010, the year the U.S. household income statistics above were gathered. Accordingly, the U.S. Census Bureau reports 61.8 million households in the U.S. alone made $111,900 or more in 2010. So GlobalRichList’s worldwide total of only 4.5 million earning this amount or more is way off.
That’s most likely so even if the website is counting individual income while the Census is counting households with combined income. If you divide $111,900 by the average number of 2.59 people per U.S. household in 2010, you get $43,204. GlobalRichList says there are only 27,624,401 people in the world making that much a year.
Watch Swedish academic Hans Rosling lecture about the dramatic decline in poverty.
There’s no telling if this is an honest mistake or purposeful inflation by that website. It would, however, serve the website’s purpose to show inflated figures because it’s soliciting donations to fight poverty for CARE International.
So the wealthier a visitor thinks they are after entering their income, the more grateful they’ll feel, and perhaps more obligated to give.
Furthermore, Business Insider reported earlier this month that you would have to earn $77,000 annually to be in the top 1% in India alone and $107,000 to be a one-percenter in China. Those are two of the countries Novogratz cites to give you the sense that his $32,000 figure must be true.
The “bad news” is you’re not as relatively wealthy as Novogratz claims. The good news is the world is not nearly as poor as he claims. There’s an absolute ocean of money out there, even in countries the wealthiest nations’ citizens think of as poor.
Disclaimer: The opinions expressed in this article do not necessarily reflect the views of CCN.com.
Last modified: October 4, 2020 10:42 AM