Wealth growth trumps income growth: What this means for distribution

John Burn-Murdoch, Chief Data Reporter at the Financial Times, put it best: “We have moved from the world of income to the world of wealth.” Median household wealth in the UK, US, Germany and France has doubled in real terms since the mid-1990s. Average incomes have only increased by around 30 percent over the same period. A generation ago, if you wanted to save your way from the bottom to the top wealth quartile, it took 20 years. Today you need 40. The new report on the asset price index from the Flossbach by Storch Research Institute lies exactly in this framework. He documents that asset prices in Germany have risen by 75 percent since 2005, but real wages have only risen by 15 percent. The distributional effect is brutal: the lower middle class has experienced an increase in asset prices of 17 percent in 20 years, and the wealthiest households have experienced an increase of 86 percent. Daniel Stelter talks about this analysis and its consequences with the business mathematician and senior research analyst at the Flossbach von Storch Research Institute in Cologne, Dr. Philipp Immenkötter.