I remember this question being asked in one of my introductory economics classes when I was in college. Being that everyone was 18 to 20 years old no one had a good answer. I won’t pretend the answer changed my life because to be honest I didn’t even think about it until recently. The answer my professor gave made sense,
Rich refers to income while wealth refers to assets
There is obviously a natural correlation between the two concepts that works for most of the bell curve. As such, there are those exciting cases that people read where a janitor making under the national average did the right thing and was able to amass a fortune to leave to future generations; as well as those cases that I have highlighted where a family making literally $460,000 barely have a positive balance sheet.
I hadn’t even thought about that discussion in my econ class more years ago than I would like to admit until I saw the comments on this recent post from Money titled, Top Incomes can be Fleeting. The article has some cool statistics on the aftermath of those who report their income in the top 1%
In fact, nearly 60% of those in the top 1% of taxpayers at the start of any 10-year period between 1987 and 2010 had dropped out by the 10th year. That’s from a study by the U.S. Treasury Department.
And the Tax Foundation found this: Of those who reported income of more than $1 million between 1999 and 2007, about half only reported income that high for one year
The comments are angry almost vicious. Interestingly though most of the commenters seem to forget that there is a difference between being rich and being wealthy.