[wyager]

Have you considered that you have the causality flipped, and that people are generally rich because they're good at making money under adverse conditions? Would you expect someone who was capable of accumulating large amounts of wealth to get BTFO by a market downturn?

If pensions have a problem, it's because they were never economically viable, and at this point basically serve as a vehicle to transfer money away from the majority of people and towards retired boomers and government employees.

[freemint]

> Have you considered that you have the causality flipped, and that people are generally rich because they're good at making money under adverse conditions?

They might have. However any look at generational wealth dynamics quickly dispels that idea. Any above market performance rich people have are simply able to have better managers because managing bigger pools pays more and maybe an education which focuses on maintaining and building wealth. This education could be widely available but it is not made widely available. I am not going to imply a conspiracy here or appeal to class interests for explanation and just leave it as a statement of fact.

[wyager]

> However any look at generational wealth dynamics quickly dispels that idea

Generational wealth statistics, as well as heritability research, are consistent with the idea that expected wealth is causally preceded by genetically heritable factors.

Wealth is mean-reverting along genetic lines on multi-generational timescales. The idea that wealth is self-perpetuating per se fails to explain the degree to which e.g. poor lottery winners do not kick off dynasties, why children of moderately wealthy parents also tend to be moderately wealthy (not explainable by direct inheritance), etc.

The one domain where your model works better is perhaps for extremely wealthy families like the Rockefellers, but I'm hesitant to say that the model generalizes - that sort of thing might be a rare exception.

[staticman2]

Unless a child is put up for adoption they will inheret a lot more than genetics and money from their parents.

For example: The child of a doctor or lawyer is much more likely to be pressured or encouraged to go into law or medicine.

[wyager]

> Unless a child is put up for adoption

They have, of course, tested this as well.

[staticman2]

Which is neither here nor there.

If you don't understand that the child of a lawyer will be encouraged or pressured into going into law, and therefore staying in the socioeconomic group, you'll overrate genetic factors.

[wyager]

The genetic factors estimates come only from adoption data, and there are studies that condition further on things like adoptive parent material conditions. The researchers are not dumb; they have put some thought into it.

[mihaaly]

As far as I see those making money (actually value behind it) are not getting rich but those who sit on top of the money flow do. Skimming it.

Also pension funds take over money from young or middle age, yes, but not giving it to anyone else than themselves on the end, when they became old. It is not given to boomers, are you sure you know what pension funds do and how it differs from traditional (social) pensions?

Not given to else eventually, except in the meantime when given into the care of financial professionals to hold it for them to keep its value - for a very generous fee, not for free of course, the fee of the professionals is determined by the professionals themselves - and indirectly to bad politicians to finance the everlasting popularity spending and consequential budget deficit through bonds (or sometimes for a good cause too, like in recent and ongoing turmoiled period in the form of social support, which might still strongly overlap with popularity runs, see current UK government).