The super-rich in global perspective: a quantitative analysis of the Forbes list of billionaires

Abstract

Why are there more super-rich people in some countries than in others? Extraordinary wealth is often regarded with envy and might raise the suspicion that it can only be accumulated with the help of a minimalist state that does not concern itself with the plight of the many. This raises the issue whether a high number of billionaires can co-exist with a high-taxing, interventionist, social and welfare spending government? These two questions are at the heart of this paper's analysis.To answer them we undertake a quantitative analysis of the global Forbes list of billionaires.2

Do capitalistic institutions breed billionaires?

“…The additional independent variables for the respective countries, besides the components of the Economic Freedom Index, are: GDP per capita and population size 2012, Human Development Index (non-income variables), the guarantee of property rights 2 , the rate of unemployment, the burden of taxes in percent of GDP, the public debt in percent of GDP, the income tax rate, the corporate income tax rate, as well as the average GDP growth rate between 2002 and 2011. Hence, in this estimation the respective variables for measuring 'capitalism' as economic freedom are included; moreover, the presumably special role of property rights (Neumayer 2004) is accounted for by an explicit inclusion of this variable.…”

“…In effect, the very different positions of Petras (2008) on the one hand and of Neumayer (2004), as well as of Sanandaji and Leeson (2013), on the other hand will be tested: Does "capitalism" play any role in determining the number of billionaires globally?…”

“…Employing regression analysis, Neumayer (2004) reports that only the level of property rights protection contributes in a statistically significant way to the explanation of the number of the billionaires in the Forbes list, world-wide averaged over the years [2001][2002][2003]; variables of government intervention and control, the fiscal burden, trade openness and the level of social protection played no statistically significant role when controlling for GDP per capita, population size and the (extraordinarily high) number of billionaires in the USA.…”

“…5 Consequently, the dependent variable, the number of billionaires, is censored. To solve this problem, Neumayer (2004) applied a maximum likelihood Tobit estimation. In this paper, a negative binomial logit-regression is run (Hilbe 2014).…”

Russia's Billionaires

“…If the rich get richer through lending and compounding the interest, then countries with consistently higher real interest rates should have more billionaires (Piketty 2014). Of course, accumulating wealth is harder in countries with high tax rates and where property rights are insecure (Neumayer 2004). To capture the latter, I use a measure of "rule of law" from the World Bank's Governance Indicators.…”