Who are the "Rich"?

November 13, 2003

Many Americans do not know who the rich really are. According to David Hogberg of the Public Interest Institute, many equate being rich with lives represented on television shows like "Lifestyles of the Rich and Famous."

In their book, "The Millionaire Next Door: The Surprising Secrets of America's Wealthy," professors Thomas Stanley and William Danko have tried to clear up these misconceptions. They found:

  • Millionaires became millionaires by budgeting and controlling expenses, and they maintain their affluent status the same way; for example, 60 percent have never spent more than $32,000 for a car.
  • Much of the money they save goes to investing; the average millionaire household invests up to 20 percent of its income annually.
  • Contrary to popular belief, most millionaires are not bankers, attorneys or corporate managers; most typically are locally-based professionals such as welding contractors, auctioneers, pest controllers and paving contractors.
  • Eighty percent of millionaires are first-generation millionaires.
  • Most millionaires do not spend their time out on the golf course or vacationing on the Riviera; nearly two-thirds work between 45 and 55 hours a week.

The evidence shows that people who are rich do not fit the stereotypes that many Americans have about them. By and large, they are frugal, prudent, hard-working entrepreneurs who did not receive their wealth from inheritance.

Sources: David Hogberg, "Who are the 'Rich'?" Public Interest Institute at Iowa Wesleyan College, September 2003, Public Interest Institute; based on Thomas Stanley and William Danko, "The Millionaire Next Door: The Surprising Secrets of America's Wealthy," Pocket Books, New York, 1996.

 

Browse more articles on Economic Issues