| ▲ | dahfizz 14 hours ago | |
> They are illustrations of a general principle: the legal inheritance channel compounds while the biological one reverts. All this pseudo-math relies on the fact that family wealth strictly compounds and does not decrease or revert to the mean. But that is not true. Economists study this, and the exact numbers differ but family wealth _does_ revert back to the mean in just a few generations. Wealth does not stay in the same family compounding forever. https://www.jstor.org/stable/10.1086/378526 https://bnh.bank/wp-content/uploads/2023/05/Heres-to-Your-We... | ||
| ▲ | bayeslaw 12 hours ago | parent [-] | |
Fair point on the rhetoric: "no regression, no noise, just compounding" overstates it a bit. Individual family wealth does dissipate across generations. The model actually reflects this: η=0.85 inheritance fraction, threshold gating that blocks compounding below ~$20k, and a residual term that captures the noise and bad luck - which your sources are measuring. The stronger claim of the essa is different from "any given dynasty compounds forever." It's Piketty's r > g: capital returns have systematically outpaced economic growth, so the wealth class maintains and grows its share even as specific families within it churn. | ||