What Data Tells Us About the World’s Wealthiest
By: Dasha Metropolitansky
Tags: Billionaires, Data Science, R, Data Visualization

In the spring semester of my freshman year at Harvard, I took a class called “Using Big Data to Solve Economic and Social Problems.” One of the most interesting subjects we explored was equality of opportunity in the United States. We learned that children’s chances of earning more than their parents is not uniform: it varies significantly depending on their race, gender, and where they grew up.

Much of the class focused on researching data and analyzing outcomes for the lowest percentiles of the income distribution. I was curious about the other extreme. I wanted to look at trends in the numbers, geographical locations, sources of wealth, and net worth of the world’s richest people.

Photo by Forbes

I discovered a dataset created by researchers at the Peterson Institute for International Economics (PIIE) which uses data from the 1996 to 2016 Forbes’ World’s Billionaires lists. According to the PIIE researchers:

“From 1996 to 2010, the data include the name, rank, country of citizenship, and net worth (current US dollars) of the world’s billionaires. From 2011 on, the source of wealth is also provided, listed either as a specific company or broader sector.”

The PIIE researchers added several variables to the Forbes’ data: the billionaire’s age, net worth in 1996 US dollars (to account for inflation), and their country’s GDP and level of economic development. I also created variables for the continent and country name, in addition to the 3-digit country code included in the original dataset.

Here’s what I found from my analysis…

The number of billionaires has quadrupled in the last 20 years

Clearly, the billionaire population around the world has skyrocketed from 1996 to 2016 (more precisely, it’s increased by 396%). But the upward trajectory hasn’t been all smooth sailing: growth was relatively stagnant prior to 2000 and negative in the immediate aftermath of the dot-com bubble burst of 2001 and, most notably, the financial crisis of 2008.

The United States consistently has the most billionaires

This animation ranks the 10 countries with the highest number of billionaires for every year from 1996 to 2016. The most striking finding is that not only has the United States without exception had more billionaires than any other country throughout the decade, but also the difference in the number of billionaires in the US versus a runner-up country and the others is very large, even taking into account differences in population size. In every year except 1999 and 2000, the US has had at least 2.5x the number of billionaires of any other nation. However, this gap is slowly narrowing, and it’s evident that China is catching up to the US: China first made the list in 2008 (ranking 5th) and has consistently ranked second since 2013.

There are quite a few interesting observations about countries’ placements in the rankings:

In total, 19 countries have made the list at least once.

The only countries who made the list every year since 1997 are the United States, Germany, Hong Kong, and the United Kingdom.

The rankings reflect Japan’s gradual economic decline: it ranked in the top 5 until 2006, dropped to the second half of the list for several years, then dropped off the list after 2011.

India has consistently made the rankings (usually hovering around 4th — 6th place) since 2005.

Russia has ranked in the top 5 since 2003, although it experienced a sharp decrease in the number of billionaires after 2014, when the US and the EU implemented sanctions.

A note of personal interest (and pride): Canada has made the rankings almost every year since 1999!

Asia has experienced the fastest growth in billionaire population

The number of billionaires is growing most rapidly in Asia and the Americas, with the most growth occurring after 2008. Interestingly, the Americas and Europe had very similar number of billionaires prior to 2000, when they diverged suddenly and significantly. Ever since, their growth patterns have mirrored each other but the Americas remain significantly above the rest. It was also surprising to see that the number of billionaires in Africa has consistently been low in spite of Africa’s tremendous economic growth in the past two decades.

Billionaires in developed economies are getting richer at a faster rate than their counterparts in less developed countries

After 2003, billionaires’ total net worth surged — particularly in emerging economies, where the increase was practically exponential — until it plunged drastically immediately after the 2008 financial crisis. However, after 2010 the billionaires bounced back, and their net worth started growing again, although those from less developed countries experienced a noticeably slower rate of growth.

Since 2000, over a quarter of billionaires have derived their wealth from a financial industry

The dataset groups the sources of billionaires’ wealth into the following 6 categories:

Resource Related : energy (excluding solar and wind) mining, steel

: energy (excluding solar and wind) mining, steel New : computer technology, software, medical technology, solar and wind power, pharmaceuticals

: computer technology, software, medical technology, solar and wind power, pharmaceuticals Non-Traded : retail, entertainment, media, telecommunications, construction, restaurants and other service industries

: retail, entertainment, media, telecommunications, construction, restaurants and other service industries Financial : banking, insurance, hedge funds, private equity, venture capital, investments, diversified wealth, real estate

: banking, insurance, hedge funds, private equity, venture capital, investments, diversified wealth, real estate Traded : agriculture, consumer goods, shipping, manufacturing

: agriculture, consumer goods, shipping, manufacturing Other: education, engineering, infrastructure sports team ownership, unidentified diversified wealth

Although the highest proportion of billionaires have and continue to derive their fortunes primarily from financial industries, the size of this proportion has been on a steady decline since its peak in 2008. On the flip side, the percentage of billionaires from the “new” and tradable goods industries has been consistently increasing since 2008.