Wealth matters in 21st-century Britain, in part because there’s lots of it around. British household wealth was three times GDP in the 1970s. It’s seven times today. Falling interest rates are the main cause, pushing up prices of existing assets. Resolution Foundation research shows the result is bigger pounds and pence gaps between the richest and poorest 10th of households, which increased by £400,000 since the mid-2000s to £1.4m. With these gaps being many times even high incomes, you can’t earn your way to being wealthy – you have to marry wealth or be born with it.
Even ignoring inheritances, evidence shows those with wealthy parents tend to be wealthier. Why? Well there are eugenicists out there who think wealthy families produce successful children because “one is the subject of one’s genes”. But thanks to recent research from Sweden, we can politely put that nonsense to bed.
It comes out firmly on the side of nurture, not nature. The study examines outcomes for adopted children, comparing their wealth with that of both their biological and adoptive parents, and finds that environmental, not biological, factors are crucial. Once we add inheritances back in, the role of ability (inherited or otherwise) is even smaller. As the paper puts it: “Even in egalitarian Sweden, wealth begets wealth.” In less egalitarian Britain, this should equally alarm socialists on the left and meritocrats on the right.
• Torsten Bell is chief executive of the Resolution Foundation. Read more at resolutionfoundation.org
