I don’t think I want to spend time analyzing the difference between household wealth and household income, but some people need to do that, such as economics and sociology researchers, and policy makers.

• There are two important quadrants: HighIncome_LowWealth, and LowIncome_HighWealth.
• Some people are embarrassed to talk about (not necessarily personal) income, and prefer wealth instead.
• Some people are embarrassed to talk about (not necessarily personal) wealth and prefer income instead.
• ^^ These individuals may (subconsciously) prefer to steer the conversation.

The traditional Chinese tend to save and invest (Earn/Save/Invest) and become fairly wealthy.

— data quality .. Wealth (net asset) statistics are often based on surveys (including questionnaires). However, home equity, brokerage portfolios, 401k, SSA account.. are reported to government.

Income statistics are mostly based on tax filing and far more accurate.

There are unreported incomes and unreported assets. I won’t speculate which of the two is a bigger problem to the statistician.

— https://www.brookings.edu/blog/up-front/2020/02/27/examining-the-black-white-wealth-gap/ says

Wealth confers benefits that go beyond those that come with family income. [I think it has to be substantial wealth]

Wealth is a safety net that keeps a life from being /derailed/ by temporary setbacks and the loss of income. This safety net allows people to take career risks knowing that they have a buffer when success is not immediately achieved.

I used to dismiss wealth, even a USD 1M wealth.. perhaps due to peer influence. Now I think in a downturn, even a modest reserve could be more important than income. Income could stop any time. Income is less reliable than wealth overall.

Family wealth allows people (especially young adults who have recently entered the labor force) to access housing in safe neighborhoods with good schools, thereby enhancing the prospects of their own children. [Surprised to see that housing is a key factor in the authors’ opinion.]

Wealth affords people opportunities to be entrepreneurs and inventors.

And the income from wealth is taxed at much lower rates than income from work, which means that wealth begets more wealth.

— savings habit .. is the crucial link between income-level and wealth-level.

• with above-median income, some savings habit (splurge control) would build some wealth, in the form of a reserve.
• with below-median income, building the same reserve would require discipline.
• If your household income is above 3 times the median (like USD 200k), then it’s easy to accumulate the same wealth but without savings habit that wealth is likely depleted and never grows.

— my situation? I feel my household income is (lower) middle-class among my cohort in the tristate but my household wealth falls into a (slightly but definitely) higher percentile among this same cohort. The explanation … is found in multiple blogposts. I will summarize again:

• Earn/Save/Invest .. wife and I are superior at Save and decent with Invest
• zero debt
• inheritance? $0 now