The coffee in my cup was still warm when I spluttered over a story in the morning papers, purporting to show that:
One person in five who receives university education becomes a millionaire, according to the office of National Statistics (UK).
The figures showed a stark gap in wealth between people with different levels of education. Only three per cent of people with no formal educational qualifications have assets worth more than £1 million.
10% of UK citizens are millionaires.
The figures also show an increasing wealth gap between rich and poor. The richest 10 per cent of British households own 44 per cent of total household wealth, and this share has increased under the Coalition. This group owns about five times as much as the poorest 50 per cent of the population, who between them account for just 9 per cent of overall wealth.
more evidence of why going to university is a very good deal
At this point I should say that the story was covered in many newspapers but I thought it best to aim my criticisms at the Daily Telegraph version shown above, which is right wing in orientation, so it should not seem that I was picking at an argument because it was left wing.
Look at each statement in term, and then we can start the test. Assume for the moment that the basic figures are right, even though they do not allow for personal and mortgage debt, do not mention inflation adjustment, do not show housing wealth and inflation separately, and only later in the article is there any allowance for age. Usual messy type of data, in fact.
Which statement do you consider the least validated?
Clue: one statement was made by a government minister in charge of universities.
These statistics show that by late working life there is a 7 fold difference in reaching £1 million in marketable wealth according to levels of education. Categorization is not causation. My gripe (which if you are reading this blog you will already have anticipated) is that prior differences in intelligence and diligence very probably account for a large part of this variance. In this story the differences between tribes of intellect are seen as something which wider access to university education will reduce. It implies that if all citizens had tertiary education the stark gap would be reduced. Would it? I do not doubt that everyone would know a bit more. I am certain they would have drunk more. But I doubt that individual differences would have been annihilated by this benevolent intervention. The current 40% or so participation in university education might add to the discrepancy somewhat, but at marginal universities the occupational benefits are very small, probably lower than having started work earlier and risen up the ranks.
Before I get back to my rapidly cooling coffee, here is a minor little technical note: what percentage of the national wealth should a particular percentage of the population own? The implication of this damn fool statistic is that 10% of the population should own 10% of the wealth, and if they own more, something is wrong in that society.
So, try thinking about it. In a move likely to enrage Daily Telegraph readers, and possibly gain the approval of Guardian readers, let us put every citizen on the same wage, regardless of their talents. Then allow those who are inclined to do so to save some of their income, which usually pays 7% per annum, judged from historical records. Allow 40 years to transpire under this egalitarian wage regime. How much wealth will the top 10% own at the end of that period?
Clue: it will be more than 10%.