NZ Initiative's Eric Crampton deconstructs Oxfam's 'wealth inequality' figures and points out that you might be more financially well-off than you think

By Eric Crampton*

Want to rail against the Global 1% rich-listers? Be a bit careful: if you own a house in Auckland, mortgage-free, you could easily be on that list. And roughly half the country is in the global top 10%. But, either way, the numbers miss some of the most important parts of Kiwis’ real wealth.

Oxfam’s annual global wealth inequality figures came out last week. Every year, Oxfam repackages Credit Suisse’s annual report on global wealth figures into a more outrage-friendly format. This year was no different.

The Credit Suisse reports do a decent job of pulling together statistics held in different formats, all over the world, and trying to make them comparable. Their household wealth figures count individuals’ assets, including housing and any stock portfolios, and net against those figures any household debt. They then provide Gini indices of wealth dispersion within countries.

The Oxfam figures pick up from there by identifying a small number of high net worth individuals in each country, adding up their wealth, and then checking to see how many of the least wealthy households’ assets would equate to the holdings of the rich-listers in selected countries. The framing suggests that the poor are poor because the rich are rich, and that policies targeting the rich are the best way of helping the poor. And it ignores the massive drop in worldwide poverty since 1980.

The framing hardly helps us to understand what’s going on in the world.

To begin with, the measure of household wealth gives a very poor picture of households’ real asset stance.

Consider two countries. In the first country, everyone has a private retirement account. A part of your taxes are shunted into it each year, with top-ups from the government if your income is too low. The portfolio is designed to give you an annual income equal to a reasonable fraction of the country’s average personal income when you hit age 65. If you live in that country, the value of your retirement account will count towards your personal wealth. By contrast, if you live in a country like New Zealand, where the public retirement system does the same thing without routing things through personal accounts, your NZ Super asset does not count in the personal wealth balance sheets.

This automatically makes wealth look far more unequal in New Zealand: the main retirement asset for the country’s poorer households does not get counted toward their wealth, while richer households’ Kiwisaver accounts and houses will count in their favour.

Countries using private medical savings accounts, with government-funded top-ups, to provide health care will count as having wealthier citizens than those relying on public health systems, even if the experienced outcomes for those using health services are identical in both places.

Consequently, as the University of British Columbia’s Professor of Economics Kevin Milligan put it, “any measure of wealth that ignores the future consumption value from public programs is a fairly useless measure of wealth.”

Consider too that human capital – your education, and the higher income it will bring over the course of your lifetime – does not count towards your wealth in these kinds of figures. But the student loan you used to finance that education will count against any assets you do hold. To slightly paraphrase another Canadian economics professor, Université Laval’s Stephen Gordon, if you’re using wealth as a measure of inequality, the exercise is pointless if you’re ignoring human capital. Auckland University’s Professor of Statistics Thomas Lumley raised similar concerns with this method. The method implies that a new graduate doctor, with a student loan, is poorer than a homeless person who has no debt and some change in his pocket. It is nonsense.

Finally, different countries have different age profiles. Countries with a lot of people just moving into retirement will have a large number of people right at the peak of their financial wealth. You save and pay off student and mortgage debt during your working career to build up some assets for a more comfortable retirement, then draw on that wealth during retirement. Measures of national wealth inequality that do not adjust for national differences in age profiles will make a bit of a hash of things. Countries with a more dispersed age profile will then have greater measured wealth inequality.

For all of these reasons, inequality in wealth as measured by figures like Oxfam’s give a very poor indication of experienced inequality. But even taking that into account, New Zealand’s wealth inequality figures are decidedly middling by international standards. New Zealand’s top 1% own a bit less than twenty percent of net national wealth, which is entirely on par with the OECD average.

For a better measure, we should look towards inequality in household consumption. Income changes naturally over an individual’s life-cycle. People save during periods of relatively high earnings, and borrow during periods of relatively low earnings. Consumption then is more stable than income for any household. And consumption measures also reflect household wealth: wealthier households will be able to sustain higher ongoing levels of consumption because wealth provides a buffer against periods of lower income.

The best measure of household consumption inequality in New Zealand comes from work by Chris Ball and John Creedy. It shows household consumption inequality rose a bit in the late 1980s, but subsequently fell and, by 2010, was below the figures from the early 1980s.

The better take on the Credit Suisse figures is that New Zealand is an extraordinarily wealthy country. Credit Suisse said New Zealand placed second only to Switzerland, although that high placement is in part due to New Zealand’s house price appreciation and should be taken with a grain of salt.

Anyone in New Zealand with net assets of around $100,000, including the equity in your home, is in the global top 10%; anyone with net assets of just over a million dollars – the value of the average Auckland home – is in the global top 1%. Over 270,000 Kiwis count in the global top 1%, without even considering New Zealanders’ high levels of education or the value of the entitlements like superannuation and health services provided by the government.

So be careful in railing against the global top ten-percent or top one-percent. You may well be a part of it.


*Eric Crampton is head of research at The New Zealand Initiative which provides a fortnightly column for

We welcome your help to improve our coverage of this issue. Any examples or experiences to relate? Any links to other news, data or research to shed more light on this? Any insight or views on what might happen next or what should happen next? Any errors to correct?

We welcome your comments below. If you are not already registered, please register to comment or click on the "Register" link below a comment.

Remember we welcome robust, respectful and insightful debate. We don't welcome abusive or defamatory comments and will de-register those repeatedly making such comments. Our current Comment policy is here.


Want to rail against the Global 1% rich-listers? Be a bit careful: if you own a house in Auckland, mortgage-free, you could easily be on that list.
Really??? If you own a freehold house in Auckalnd and are worth say 2 or 3 million then you are in the top 1% club???

yes really, it takes just over $1 mil NZD in assets to be in the top 1%

Any measure of wealth based on fiat currency is just nonsense. Choose a real number like food per person per annum. Or productive land per person. Or energy per person available(as opposed to currently consumed).

exactly right.
All that is available for purchase/use each year is all that the economy can produce each year. Its a mirage to think that the wealth of the rich can be divided up and distributed ... the resources / energy isnt there
eg If Bill Gates wants to cash in 50 billion for fresh milk tommorow he simply cant. It doesnt exist.


I am looking for some enlightenment here. Just how do you measure food per person? Or productive land? I own no land other than which surrounds my urban home,but I own another property and a stockmarket portfolio and these would put me well over the 1% threshhold. Would a peasant farmer with a few acres of good land,be considered wealthier than me,by your measure? Again,how is energy per person measured?

If you have wondered why the equality meme sounds new and doesn't strike a nerve

Equality of outcome is not encoded in our software

Haidt is usefull lense for viewing many issues e.g The Treaty of Waitangi and Maori wards do not fit within our (universal) moral foundations. - Gareth Morgan take note.

Time to shape up the presentation of these graphs DC. First they all need a label of their own, we should not have to scoot about the article text to try to figure out just which argument they relate to. Then each axis should be fully labelled. Reproduction onto this site does not always work well either. DC - It's time to shape up to the standard you were taught in school physics all those years ago.

made sense to me. Just sayin'

I'm a one percenter. True but it's completely nuts. Meanwhile I have contact all the time with NZers who have absolutely nothing.
My suggestion is that we leave tax out of it but reform the labour market. Specifically stop the immigration that takes the low paid jobs. That would mean that to attract café workers and truck drivers would mean paying more than the minimum wage, and I would have to pay a bit more for things.
But think of how much better business could be with more cash in the pockets of 50% of the population.

Under 45s know perfectly well there is no public pension coming to us, that the public health system is failing and that student loans will eventually have interest reinstated.

In paying tax towards superannuation, we have no expectation of receiving it. We are simply shoring up the crumbling walls of the super system for those who came (and spent) before us. With thanks, they vote.

Similarly, we are watching our public health system slowing die - to such an extent that anyone who can afford it (or whose employer offers it) retains private health insurance. This ensures that a hernia can be repaired and the patient may get back to work and continue to pay taxes, or that their child can benefit from a full suite of two cochlear implants so that they may succeed in school - and go on to pay taxes. Meanwhile, the very elderly get full hip and knee replacements to improve their social and sporting lives. With thanks, they vote.

We are also cognisant that our student loans won't be interest free forever. These student loans are unavoidable to any but the rich, as we now must obtain expensive tertiary education to attract the attention of virtually all employers paying more than minimum wage. This puts some of us in deep debt - which impacts on mortgage applications - but saves employers loads on training costs. With thanks, they vote.

Yes, the demographic is swinging back our way. Yes, soon we will wield the balance of voting power - but not yet. Meanwhile, my pockets are empty, my wallet violated. Each day that passes, our elders continue to consume on the public tick, which I and my children (and their descendants) will be forced to account for when our elders are long gone. By the time our younger generations take back the reigns of power, I fear that there will not be much left to rule over.

So, sure, I'm feeling rich. How about you?

"soon we will wield the balance of voting power .."

But prosperity cant be voted into office no matter what we are told. America cant be great again! The cheap to produce hydrocarbon well is near dry. The debt incurred in the meantime is unpayable - because it assumes an ongoing & increasing! supply of cheap hydrocarbons to burn as we please.
But the debt boom serves a temporary purpose ... (as you state) to maintain the myth so that we can fund hip replacements and give the boomers a lovely send off ...


The baby boomers who are well off are those who own property which they will sell off as it suits them and /or pass on to their children. A lot of baby boomers are quite badly off which doesn't bode well for the next generation.

No jh. The boomers that are well off are the WHOLE lot of them.They have lived through the peak fossil fuel burn - there is no prosperity to pass on. The energy burn delivered the prosperity and the lack of it will deliver the opposite in every way; conflict / mass population decrease / crashing living standards / life expectancy/ democracy / famine.
Unless the powers that be can keep adding new debt into the ponzi, energy companies will not last many more years.

ham n eggs,

I don't think I have seen a post of yours,that doesn't mention energy. Are you involved professionally in the energy industry? I am interested in it,but only as a layman. I am about to start a short university course on the politics of oil and gas.
When,in your opinion,will the energy crisis make itself felt? Will the opening up of the Arctic to exploration through climate change postpone the crisis?

Classic, very well done!

New Zealand can be great again, hang on it is Great that is why people want to live here! Hence people want to buy property and pay good money to live in paradise.

You can only sell NZ once though, before what once made it great is then gone.... Good for those clipping the ticket along the way though I guess....

Too bloody bad for those already here. And see that creek at Cox's Bay, that's what we are lining up for. Have to put a lid on it all, now, too bad if Ted's gets a bit burnt

People come for lifestyle and low population. Our economy is driven by the three L's (Devon Report): Lattes (milk), Leisure (tourism) and Land (migration ).

Yes I'm in the 1% club and I'm not really surprised about it when put in a global perspective. There are countless Kiwis who have nothing or even worse owe more than what they have, its called choices, making sacrifices and being smart with money if you want to get ahead. Kiwis are out of touch, especially the next generation. I suggest you travel and see what kind of shit the rest of the world is living in and then perhaps you will have some appreciation of what you have when you return and then you will stop banging on about your first world problems.

1% is upper echelon. I'd rate myself in top 5%. A good target would be to get the great majority of Kiwi households in the top 10% and make every effort to maintain that, even improve it, for the next generation.
It does require making hard decisions, self discipline, community spirit and maintaining classic Western values.
You could do worse than adopt the Protestant work ethic, study Greek philosophy and learn English fluently, rid your life of all negative and degenerate influences, work hard and study hard and honour your ancestors. Exercise, eat well, dress well and be tidy.

"classic Western values.."

presume this is tongue in cheek? The West certainly doesn't have any moral high ground. Are you referring to plundering & consuming resources from everywhere we can while exporting our pollution?
As it has been said, it was a real oversight by the great one to put the christian Oil under muslim deserts.

Ham n eggs, the West can solve every problem it puts its mind to. One small problem is people with negative and unbalanced attitudes such as yours. I think you will find there is more oil produced in Christian lands than Muslim ones.

Zachary Smith - .." the West can solve every problem it puts its mind to. One small problem is people with negative and unbalanced attitudes such as yours."

Your comment does depress me, because it makes re realise the level of delusion we are dealing with. Yes i know the dialogue should be limited to real, lasting issues like Auckland house prices or what Mike Hosking is currently pondering ..

A random set of problems the "West" and your positivity might want to solve
- the world is finite but the economy requires growth to stay solvent
- energy burn and growth are correlated 1:1
- If Oil price rises, growth collapses. If Oil price doesn't rise, Oil companies will collapse
- Diminishing returns in minerals, fisheries, water, arable land - the average recycling of extremely rare metals from smart phones is less than 1%
- the less than 60 harvests left in most arable land
- the storage of spent nuclear rods when an energy crisis hits

Whats that? Someone made another 100K capital gain on a rental? Yes - i must be unbalanced to even give these things the time of day.

Excellent article.
tries to put some facts instead of hysteria. i heard the Oxfam lady talking about "the rapidly increasing inequality" when the measurements say the opposite.
OpenPensionResolutn what a bloody whinger.
Makes predictions then treats those predictions as facts in the here and now and complains about them. His pockets are empty his wallet violated...give me a break! Or give yourself a break and open your eyes

How about the facts? Super is here and supporting the elderly. You will be glad of it when you get there. Even the dire predictions of unaffordability and doubling of cost point to %age of GDP being lower than what it is for many other countries now.
Our health system? Yes rapid advances in medicine and an aging population mean rapid increases in costs, but we still have a publice health system to envy.
Student loans? They are an investment and if you can't see that you wasted your education. They have minimum impact on mortgage applications and if you were to add the tax plus student loan repayments the combined cost is still less than it was just in tax for the boomers when they were young. They suffered under 66% top tax rate with marginal rates much higher.
Fossil fuel all gone? Isn't it funny how low the cost of fuel is now when we were meant to have run out by now.
Luckily (surely it wasn't foresight?!?) we have 85% renewable power production. And we have options. Solar, wind...Even nuclear if you get past the hysteria.
The reason we are swamped with hopeful immigrants is because compared with many places in the world we still live in a paradise. And they'll get on with making their way in paradise when locals like you sit there and moan.
Have a great day!

Robt - So many errors its hard to know where to start.
Fossil fuel will never run out but most of it will never be used - It has to be viable. You cant spend a barrel of Oil across the whole system to get a barrel of Oil. And viability depends on the price/debt that end consumers can afford. Price is tanking because demand is tanking - look at shipping indexes / china export declines etc... why is demand tanking? because growth is tanking? why is growth tanking? because we are hitting resource limits and consumers are hitting limits with adding new debt.
Money is just an energy token - take away the energy, you are just playing monopoly.

The Oil cos need more debt & prices to radically go up ... their Capex/exploration has dropped to next to nothing. Conclusion; big energy crisis coming up.
Alternatives are hopeless in isolation - they need fossil fuels because fossil fuels do all the heavy lifting. Its a fallacy that the economy can keep running off electricity alone - which is what you are suggesting
As for Super - it wont exist when the financial system breaks.