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Posted at 10:32 AM ET, 12/ 6/2010

What 'millionaire' now means -- at least in Washington

By Ezra Klein

Andrew Gelman notices an important shift:

It used to be that a millionaire was someone with million dollars. Nowadays, though, the term is often used to refer to people who make a million dollars a year. (See here, for example, in a discussion of the so-called millionaire's tax break.. I guess it makes sense--lots of Americans have a million dollars in assets, and so for "millionaire" to keep its traditional meaning of "really rich," it had to shift somehow. It still seems funny to me, that this change in definition has occurred without it being formally acknowledged.

By Ezra Klein  | December 6, 2010; 10:32 AM ET
 
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Comments

"lots of Americans"

Yeah, right.

Posted by: leoklein | December 6, 2010 10:57 AM | Report abuse

leoklein,

that kind of attitude (while helping to keep the us against them mentality going) is self-defeating in terms of messaging. I'd bet a lot of people living and owning a home say in and around the 5 boros of Manhattan are on paper millionaires. 25%? 35%? It doesn't mean its accessible though.

This to me is the biggest goof that the Dems are doing in that they aren't splitting up the rich from the really rich. A $500k tax rate or a true millionaires tax rate would do that but again Republicans won't have any of that and they don't seem to ever lose that messaging point where Dems never seem to get it right.

Posted by: visionbrkr | December 6, 2010 11:17 AM | Report abuse

Please correct - or at least address - this in the main body of the blog.

"Lots of Americans" do not have a million dollars - the most recent estimate I could find claimed that there are slightly fewer than 5 million households with $1 million or more in investable assets. If there are about 110,000,000 households in the US, this means that about 4.5% of households are "millionaires." 4.5% is still a small number of people and the interests of these people do not necessarily coincide with those of the population at large, even if the Washington and New York elite imagine that basically everyone must have at least a million dollars.

(Throw in houses and the number of millionaire households increases somewhat, but the usual idea of "millionare" is, I think, people with 1 million of liquid assets.)

Here's where I found the estimate for number of millionaire households:
http://blogs.wsj.com/wealth/2010/09/16/millionaire-population-still-is-soaring/

Posted by: chadde | December 6, 2010 11:23 AM | Report abuse

chaddle, I don't think it's a mistake or ambiguity in the blog post, but is really exactly what the post is discussing. I think that many people do, or used to, consider someone's total asset value, including homes, when labeling them "millionaire" or whatever. As home prices have gone up, millionaires as a percentage of the population have grown. As visionbrkr points out, there are probably several areas of the country where people earning far less than $1 million/year are on paper millionaires because their home values and other assets have increased in value.

Honestly, I think even using a dollar amount to classify "rich" folks is a waste of time for precisely this reason. Whether you're in the top .1%, 1%, 10%, and so on, of earners is a much better metric.

Posted by: MosBen | December 6, 2010 11:47 AM | Report abuse

Another survey found that fewer than 3 million individuals have assets of $1 million or more in the US:

http://www.capgemini.com/insights-and-resources/by-publication/world-wealth-report-2010/

So that would be less than 1% of the population of the US. Again, not "a lot of Americans" by any stretch of the imagination. I think it's important to have an accurate idea of these things so that we understand what's going on when politicians advocate policies that benefit only millionaires and above - e.g. anything having to do with the estate tax.

Posted by: chadde | December 6, 2010 12:05 PM | Report abuse

I didn't know anything had changed, I just thought more and more people were using terms sloppily, as they are wont to do.

Posted by: bdballard | December 6, 2010 12:07 PM | Report abuse

Someone got 4.5% of households without including houses claiming most people only consider "liquid assets" when using the term millionaire. I don't think thats true. The people with the big mansions who live in the big fancy houses...those are the millionaires. People definitely connect housing and the concept of a millionaire.

Either way, we can probably bump the number up to 5% without any sort of controversy. That may not sound large, but phrase that another way, 1 out of 20 households are "millionaires" and it sounds pretty common. If 1 out of 20 households had their home burn down, we'd think that was quite a lot of fires!

Posted by: Nylund154 | December 6, 2010 12:14 PM | Report abuse

"It still seems funny to me, that this change in definition has occurred without it being formally acknowledged."

Why is this funny or surprising? Of course a change in a word will take some time before becoming "formally acknowledged", if by that he means entering dictionaries, being taught in schools. Language lives and breathes outside of formal institutions, and language change is typically bottom-up, not top-down. If and when this definition reaches a certain level of popularity, lexicographers will notice it and alter their dictionary entries accordingly.

Posted by: gacorley | December 6, 2010 12:39 PM | Report abuse

I think a good discriminator between affluent and really rich would be whether or not a person gets the bulk of his or her income from cash salary.

If most of your income comes from a paycheck, you may be doing pretty well but you're probably not really rich.

Posted by: tl_houston | December 6, 2010 2:08 PM | Report abuse

Notice, because of the taxation context, "make a million dollars a year" is really talking about Adjusted Gross Income, which is not what most people mean when they say "make a million dollars a year".

So we're talking about people who get rather more than a million dollars a year in gross income.

Posted by: adonsig | December 6, 2010 2:09 PM | Report abuse

"lots of Americans have a million dollars in assets"

Boy, I must be out of touch with America.

-- MrJM

Posted by: MrJM | December 6, 2010 11:00 PM | Report abuse

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