Why some Countries have more Billionaires than Others? Explaining Variety in the Billionaire Intensity of GDP – IMC-RP 2018/3


The list of billionaires and their wealth published by Forbes magazine in the US allows computing the number of billionaires per unit of GDP and the ratio of their wealth to GDP for various countries. These measures of billionaire intensity vary greatly – sometimes by one or even two orders of magnitude. The paper offers descriptive statistics of geographical distribution of billionaires and a preliminary analysis of factors determining the country variations of billionaire intensity indicators. Rich and well-developed tax havens, like Monaco, Hong Kong, Guernsey, Cyprus, Lichtenstein, attract a lot of billionaires, but other less developed countries with zero or low personal income taxes (Persian Gulf states – Bahrain, Kuwait, Oman, Qatar, UAE) do not have many billionaires. Unsurprisingly, the happiness index, especially one of its determinants – healthy life expectancy, is a strong predictor of the concentration of wealth in particular countries. Surprisingly, other determinants of the happiness index, such as per capita income and social support, do not matter much, whereas personal freedom does matter, but has the “wrong” sign (the lower personal freedom is, the higher the billionaire intensity). Another unexpected result is the negative relationship between billionaire intensity and inequality of income distribution as measured by the Gini coefficient derived from household surveys: billionaires seem to prefer countries with lower income inequalities. The presence of billionaires, while increasing income inequality at the very top by definition, does not increase general income inequality. Long-term trends in the billionaire intensity also appear to mirror changes in income equality within countries, as measured by the Gini coefficient: an increase before the First World War, followed by a decrease until the 1980s, and subsequently a new rise.

KEYWORDS: Income inequalities, billionaire intensity, tax rates, happiness index, murders

Vladimir Popov Research Director (Economics and Politics), Dialogue of Civilizations Research Institute (DOC-RI). I am grateful to Ekaterina Jarkov, Research Assistant at DOC-RI, for her help with the data processing, and to Dimitry Kochenov and an anonymous referee for helpful comments. Usual disclaimers apply.

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