I think we use words like “rich”, “poor” and “well off” without defining what they mean to each of us and this often causes confusion.
So I thought we should all exchange our opinions on the issue. To simplify the whole thing, let’s take a single person living alone. What kind of yearly income (before taxes) should s/he have for you to consider her or him:
a) poor;
b) comfortable;
c) rich;
d) stinking rich.
We are talking about the US and Canada right now, of course. If anybody is interested, I can give you a similar breakdown for Ukraine and Russia (in USD, of course) later on.
Clarissa's Blog 
Taxes are the great confounder [sic], but I’ll give it a go – assuming disposal income of:
Poor – 100,000
Stinking rich – > 300,000
Basic assumptions:
Rent: 500/month
Food: 250/month
Utilities 150/month
incidentals: 100/month
This is the baseline I’m using – naturally, location will have a significant impact on your residency costs and utilities (we average 300/month on the east coast – because we only have oil furnaces available, and long, cold winters).
And it’s obvious that there are gaps between the groups – I wouldn’t call someone with 20K of disposable income as poor, but they’re not exactly comfortable either. Same thing with comfortable/rich – when I made 85K/yr, I wasn’t rich – but I was more than comfortable. If that makes sense.
I guess my point -poor are those who can only (or can’t) meet the basics of life. There’s no room in their budget for frivolity or savings/investment.
comfortable people have some options (vacation vs investments)
Rich don’t have to worry about deciding between vacations or investments.
Stinking rich have to choose between vacations and investments (multiple options).
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You’re right; this varies so much! Everyone has a different opinion. I suppose my answers would be
a) poor= below $15,000
b) comfortable= $25,000-$50,000 (assuming low cost-of-living), $100,000-$150,000 (assuming high cost-of-living)
c) rich= $75,000 and up in a low cost-of-living city, $250,000 and up in a high cost of living city (and, of course, degrees in between)
d) hmmm…stinking rich for a single person living alone…let’s say anything over $400,000ish. That’s really stinking rich if you’re only supporting yourself!
Of course, I’m guessing every single answer will be different. This depends so much on personal perspective!
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I’ll just say I agree with you (more or less) Melissa, since the figures I put in my post are being randomly changed.
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Are they getting changed on their own? Gosh, that’s weird. I thought there was something weird about the numbers you gave.
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Twice, there was a random deletion of 2 1/2 lines. go figure. Makes me look like a total wank with the way it self-edited.
Last try:
Poor – less than 12,000
comfortable 25,000 to 50,000
rich – more than 100,000
stinking rich – more than 300,000
Let’s see how this goes
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This is about what I think too. Though I think my rich vs. stinking-rich boundary is at a cool 1 million, people below that are just “very” rich 😉
On a somewhat related note, this has got to be my favorite study of all time: http://www.people.hbs.edu/mnorton/norton%20ariely%20in%20press.pdf (it’s a very short read) It’s a survey of what Americans think the wealth distribution is in the US vs. what it really is vs. what they want. Turns out even the “rich” actually want a system like Sweden’s, just like the rest of “poor” America, but no one realizes it… (which is sad in many ways).
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there was some funky editing going on in my last post – I think a gremlin has invaded my system:
Poor – 100,000
Stinking rich > 300,000
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I’m sure you didn’t mean “Poor – 100,000”, right?
Now, my breakdown:
a) poor ===== less than 15K
b) comfortable; ====== from 15 to 70K
c) rich; ======= from 70 to, maybe, 150K
d) stinking rich. ====== everything above that.
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I’ll admit – it’s hard for me to imagine being single with an income >150,000. I’ve been married with kids for so long, that figure doesn’t seem particularly outrageous.
After all, I just dropped 1,000 yesterday on dance and drama classes. A cheap night at the movies is 50 bucks. After dinner last night, my son asked what else there was to eat – he was still hungry (he hasn’t stopped eating for 3 weeks now – save for sleeping)
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I just heard from a colleague who pays $1000 a month for her daughter’s riding lessons. All one could wish for, it seems, is a kid with a cheap hobby. 🙂
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And I guess the difference between comfortable and rich is the decision making process involved when paying for these hobbies. Did you colleague divulge this information as casually as getting a hair cut – or was there consternation in her demeanor. In order for us to pay for the drama/dance classes, there are things that we have to do without, and choices we have to make. Like heating the house to 63 degrees in the winter, rather than 68. And making our own laundry detergent rather than buying it from the store. I wouldn’t dare put myself in the poor class, because I have the ability to make these choices. But we’re not solidly in the comfortable class either.
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This is a significant sacrifice for them with 4 kids, one entering college, and one preparing to. So yes, I think they are in the same boat as you are.
Often, however, the result of all that sacrifice is the kid with the Pepsi can drama. It’s the same kid I’m talking about.
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Oh dear lord. Someone incapable of opening a can of Pepsi shouldn’t be allowed near 1/2 ton powerful animals. That’s just a disaster waiting to happen.
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This is still a really complicated question, though I appreciate your breaking it down like this. Two things immediately come to mind.
1) Health care in this country is costs about $10K/annum for a healthy single person. Do you take that into account when calculating income? If your job pays for some sort of health care, do you add that into the “income” someone has. If they don’t, how do you calculate the fact that a lot of people will forgo health insurance for other more immediate creature comforts, and hope that they don’t get into a car accident on the way to work?
2) The numbers vary greatly locality to locality. A single person working and living in or near New York City needs a lot more money than someone living and working in a rural part of the country.
Its an interesting first approximation question though.
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I think these are very important observations.
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$10K/annum for a healthy single person? Yikes, I knew I was cutting corners when it comes to my health, and yeah I’m not a pill-popper, but wow. I don’t spend anywhere near that. Maybe 2 or 3K.
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When I lived in the U.S, I was not allowed to have more than $2,000 in my bank account or in my possession at any time, otherwise I risked losing my healthcare and my funding for school. So I was some sticky area between poor and comfortable, whereby I didn’t have enough for luxuries like going out or basics like shampoo and had to borrow from friends or rely on donations, but I had my housing and school paid for mostly, had internet access and a laptop, as well as a bus pass so I could go anywhere within city limits for free, so I was luckier than most, even if I was living on a severely limited income.
For me, “poor” as defined for a single person with no kids would be defined as making about $12,000 a year or less, the next step up would be someone like me with no real income but who has the assistance to live above typical poverty, then comfortable would be $25,000-$45,000, rich would be $80,000-$100,000, and stinking rich would be $125,000+.
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In Warren Buffet’s recent op-ed in your favorite rag, the NYTimes, he pointed out that his proposition that the rich be taxed at least as much as the poor should be qualified. He noted that many people would think that a person earning $350,000 a year is rich. He compared that to himself making $350 million a year. As you can see, the first person is a pauper by comparison.
One of my son’s has 4 kids, lives in a 40 year old double wide and makes about $30K per year. That is poor. Don’t worry, we finally talked him and his wife into having their appropriate tubes tied.
When I grew up in the 1950s I thought that being able to save and not live paycheck to paycheck meant that you were finally middle class. But these days easy credit has changed all of that and we have people living in McMansions and driving Escalades who still live paycheck to paycheck..
For me, rich is not having to work and still being able to live in a big house, drive any car you wish and send your kids and grandkids to an Ivy League university. I guess you having a PhD from Yale makes your parents rich, hey Clarissa? Sort of like Mitt Romney or Rick Perry.
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You don’t have to pay for grad school at Ivies. They pay you to be there instead. So theoretically anybody could go. Practically, it is mostly rich kids, of course.
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Then I need to talk my wife into stopping going to Land Grant colleges and go to an Ivy. She is now on university #14 and something in excess of 300 credits. You can imagine our student loan bill, much less the copying bill for all those transcripts when she applies to a new one! The problem is that the Ivies don’t have the types of engineering programs she needs.
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My first entered the Univ of New Orleans (for poor kids) as a 17 year old who was graduated from high school at 16 and kicked out of the house the next week by her father. She earned her tuition by tutoring incoming freshmen at Tulane (for rich kids) in common fractions and other 3rd grade math. So much for rich kids at rich schools.
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“You don’t have to pay for grad school at Ivies. They pay you to be there instead.”
O_O
Now I really regret not encouraging Jaime more to go to Harvard when she was toying around with the idea, to do a master’s in history of science.
Maybe I can do my J.D/Master’s at Cornell and she can do her PhD at Harvard…. ?
Why didn’t anyone ever tell us this before?!
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I thought everybody knew, to be honest. How is one supposed to get a PhD without stipend??? The debt would be ridiculous.
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I suppose it depends on the discipline. In the states, when I was seeking advice about going into law, they told me that it would be very expensive to do so, and that I would be in serious debt by the end of it. I was told the average law student in the U.S has about $60,000 in debt to their name.
I am not sure if that is true in Canada, if getting a J.D (or master’s of law) is free here, or I can get a mixed M.A/J.D at U Toronto for free, I will do a backflip.
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My understanding is that you have to pay for professional graduate schools (medicine, dentistry, law, business), and these end up resulting a pretty hefty debt. People still do it because of the high earning potential.
To get a PhD in the natural sciences and engineering you can pretty much expect to go “for free” — be a TA or an RA or even get a fellowship (often the student will have each of these at some point along the PhD), all of which cover tuition and provide a small stipend.
I don’t know in the humanities or social sciences, I will defer to Clarissa and others with direct knowledge of the fields. It is my understanding that RA’s in the humanities and social sciences are rare, but people can get TA-ships and support themselves through grad school that way. Also, RA’s are different than in the sciences/engineering, where you are paid to do the research that will be in your thesis. It is my understanding that an RA in the humanities means you work for the prof and it does not benefit your own thesis. But then again, I have no direct knowledge, and it may well be that Ivies offer much more generous packages than other places. What I wrote about science and engineering fields is pretty universal though.
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“To get a PhD in the natural sciences and engineering you can pretty much expect to go “for free” — be a TA or an RA or even get a fellowship (often the student will have each of these at some point along the PhD), all of which cover tuition and provide a small stipend.”
-It’s the same in the Humanities, normally. I was only expected to teach in return for the stipend for 2 years out of the 5 that were covered. I also worked as a RA to my thesis advisor but that was for extra money and it was up to me if I wanted it. However, the PhD program conditions were among the best in the country at my school. Actually, I don’t know of a place with better conditions for PhDs in Humanities. The stipend was 18-21K per year (it kept growing) + medical insurance ( people say it was a good one, although I never used it.)
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“To get a PhD in the natural sciences and engineering you can pretty much expect to go “for free” — be a TA or an RA or even get a fellowship (often the student will have each of these at some point along the PhD), all of which cover tuition and provide a small stipend”
I find that interesting. My wife was all As in one engineering master’s program at a very good technical university. When she inquired about a PhD program she was told by her adviser to forget about it unless she had a corporate sponsor, or $100k. The only one in her class who went on for his PhD was sponsored by his company.
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Diego, at R1 universities faculty in the sciences and engineering are supposed to bring in (lots of) grant money and they will pay for their RAs. Incoming students or students whose advisor is temporatily without support get TA-ships.
Now, RA support for MS students is much more rare (people don’t want to invest money in a student who will leave right after starting to become competent). At my PhD alma mater and my present uni, MS students are either self-supported or their company pays. At the PhD level, these modes of financing are very rare, and most are RAs/TAs/fellowships.
I really don’t know why your wife received the advice she did, my guesses would be: (a) it’s not a research-intensive (R1) institution so people don’t bring in (a lot) of grant money on which they would support students; (b) it is an R1 and other people bring in grant money but your wife’s advisor doesn’t or is temporarily out of money and was giving her narrow-minded advice about a PhD in his group only (lack of full disclosure about how things work prevented your wife from going to work for someone else, which is perhaps what he wanted to achieve); (c) not likely, but the advisor is for some reason clueless about the modes of financing available at that university.
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Someone once suggested that simply letting all undergraduates know this would be an easy act that would go a very long way toward increasing diversity in academia (especially socioeconomic diversity). I agree. People really do not know this, even most science undergrads! I didn’t know this until I had already met my future advisor and we were discussing the possibility of grad school, and I was explaining why it wasn’t feasible for me (too much debt already). Those of us from working class backgrounds who never knew anyone in academia have no way of knowing that we will no longer have to pay tuition or fees and will be guaranteed half-time work. I also have good insurance now. If I had known all this I might have gotten started on my PhD sooner.
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Ever since I spent a month on a medical mission to a very poor part of Mexico in 2000, I have felt amazingly rich. Running water, trash pickup, police one can trust, houses with windows and doors, plenty of clothing, shoes, food, a car, a job, money in the bank.
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