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Why Some Countries Have More Billionaires Than Others? (Explaining Variations in Billionaire Intensity of GDP)

Popov, Vladimir (2018): Why Some Countries Have More Billionaires Than Others? (Explaining Variations in Billionaire Intensity of GDP).

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The list of billionaires and their wealth published by Forbes magazine in the US allows to compute the number of billionaires per unit of GDP and the ratio of their wealth to GDP for various countries. These measures of billionaire intensity vary greatly - sometimes by one or even two orders of magnitude. The paper offers descriptive statistics of geographical distribution of billionaires and a preliminary analysis of factors determining the country variations of billionaire intensity indicators. Rich and well developed tax havens, like Monaco, Hong Kong, Guernsey, Cyprus, Lichtenstein, attract a lot of billionaires, but other less developed countries with zero or low personal income taxes (Persian Gulf states – Bahrain, Kuwait, Oman, Qatar, UAE) do not have many billionaires. Unsurprisingly, happiness index, especially such determinant of the index as healthy life expectancy, is a strong predictor of the concentration of wealth in particular countries. Surprisingly, other determinants of happiness index, such as per capita income and social support, do not matter much, whereas personal freedom does matter, but has the “wrong” sign (the lower is personal freedom, the higher the billionaire intensity). Another unexpected result is the negative relationship between billionaire intensity and inequality of income distribution as measured by Gini coefficient derived from household surveys: billionaires seem to prefer countries with lower income inequalities. The presence of billionaires, though rises income inequality at the very top by definition, does not increase general income inequality. Long term trends in the billionaire intensity, appear to mirror changes in within the country income inequalities as measured by gini coefficient: increase before the First World War, decrease until the 1980s and then the new rise.

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