Fortune: The World’s Billionaires

You may know that Forbes published tons of different and interesting lists, one of them is The World’s Billionaires. I took a look at the data and deepened my R knowledge alongside.

Countries

Let’s start with the countries. There are 1007 persons in this data set with valid Country entries.

You can see that most billionaires are born in the US and then with a big gap in China, India, Germany and Turkey. The relative distribution of billionaires worldwide looks a big different:

It mostly took some time to become a billionaire therefore I expect China and probably India to become stronger in the future.

Age

There are a few famous young billionaires like Mark Zuckerberg but most of them are quite older. The first quartile actually starts at 54, the average billionaire is 63 and the oldest one in this data set is 100.

Education

Only 51% of these people got at least a bachelor degree, 20% has a master degree and only 8.7% earned a doctorate or PhD.
Interestingly, about 5% are drop outs and 40 of these 50 drop outs are from the US.

Martial Status

Marriage is still high for billionaires. About 83% are Married, only 7% are divorced. About 5% are widowed and there are 30 singles.

Children

Children are also rather numerous. There are 176 entries with no data, i.e. either missing or no children.
Most billionaires got either two or three children but there are some outlines with 10 children or more. And there is Sulaiman Al Rajhi who got 23 children.

Net Worth

Most billionaires own between between 1 and 3.6 billion USD. The median billionaire owns 2.1 USD. There are, of course, some famous outlines like Bill Gates, Warren Buffett, Larry Ellison and Carlos Slim Helu. The complete net worth of all these billionaires is just 3.7 trillion USD. For comparison, the total US Debt is 14 trillion, that is nearly four times as much.

Self Made?

This was for me, one of the most interesting questions. I asked myself if there are differences between inherited and self-made billionaires between countries.

I’ll pick some examples.
US 69% are self-made
China 96% are self-made
Germany Only 33% are self made

Generally Emerging/New Countries, more self made, what is expected, but US positive example for an older country.

Source

Let’s talk about the sources. Rather interesting is that industries like oil and software which sound really profitable are rather minor industries. I think that has three reasons.

Firstly, becoming a billionaire takes time. It would be great to look at the first time someone became a billionaire, I think that you would probably see clusters, e.g. manufacturing probably started around 1940 but now there are less manufacturing billionaires.
Secondly, some markets aren’t that big. The global real estate market is probably a lot bigger than the global software market.
Thirdly, the ability to oligopolize markets. Let’s take oil and real estate. Oil is pretty much a commodity and you can distribute it world wide without problems. Real estate is locally limited, you can’t take a building block and just put it somewhere else, this limits the market power of companies in this industry.

You can access the data.csv here.

#110/111: Real Education

And an other book on education – mostly higher education but also K12. The book consists of two parts. In the first part he talks about the status of education in the US and in the second part he presents his recommendations.

A common dream of lots of American people is that everybody can be a superstar. They think that everybody should go to college and that schools are so bad that it’s not surprising that some people lag behind. Is that so?

Murray takes an interesting approach but not so surprising knowing his background. He takes the theory of intelligence, i.e. g in connection with multiple intelligences and talks about abilities. Most of you are somewhere below in an ability, maybe bodily-kinesthetic or musical. That’s pretty OK, but not everybody have to become a athlete or musician. However, if we talk about two other abilities: logical-mathematical and linguistic – lots of people think that everybody can become above average in them and there’s the first problem. (I will address possible solutions later)

The second problem, which is related to the first problem, is that too many people go to college. It is estimated that only 10-15% of the people have to ability to achieve B- or better in a classical liberal arts education, i.e. languages, maths, science, philosophy, history and psychology. Today, about 90% of all high school graduates want to go to college and 70% enroll.

The third problem has to do with the top 10%. These are often not challenged by school and college or miss important things besides their professional education. Murray says that these people learn to be nice but not to be good.

What could be done? The first and second problem are related and the answer is choice and individual learning. Murray gave an example of someone who had great dexterity (top 5%) but otherwise was in about the top 30% overall. He could either become a electrician with a median income of about $44k or a manager with a median income of about $88k. At first, the choice seem clear but he probably will be a superb electrician but a below average manager. And now a 25 percentile manager is making about $34k and a top electrician more than $90k. Furthermore, in economic stressful times a bad manager will rather lay off than a great electrician.

But how does this student find the alternative that he could be an electrician? Charles Murray got different parts of the solution.

The first is to discover and focus on abilities and strengths in school. If you realize that some people got strengths and not everyone is the same then you can start and cultivate them. Together with this discovery there’s a need for individual learning, that is students who are fast should go as fast as they want. There should be more flexibility in learning. I talked about all this stuff previously.

The last part is the stronger introduction of certifications instead of general college degrees. A favorite example of certifications proponents is the CPA which is acknowledge in the whole US and got a great deal of information about the ability of accountants. I personally think that certifications detached from college degrees are indeed some possibility for the future because knowledge will become more rapidly outdated and jobs will become more and more specialized.

The second part is about the liberal education in college. Some people think that liberal education have to wait till the college. This is pretty much arbitrary. Murray recommends that schools teach about history, science, literature, geography and economics in school, so that everybody will have a solid understanding of it.

The third problem goes in a different direction and Murray proposes that they learn especially about ethics. The main questions should be What is good?  and How to live a Good life? It’s important because a part of these people will later influence the public as writers, public figures or politicians and they should understand these questions and not just be nice. The second characteristics that should be learned is humility. Lots of clever humanities students that think that they are infallible because they never reached their limits. People studying maths or natural sciences nearly always reach their limits and quite fast but there are lots of people who just rush through the humanities without much trouble.