THE TEACHING ECONOMIST - William A. McEachern 
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Issue 33, Fall 2007
William A. McEachern, Editor
Mine's Bigger!
John Kenneth Galbraith, who died last year at 97, once wrote that "Of all the classes, the wealthy are the most noticed and the least studied." Robert Frank, a reporter for The Wall Street Journal aims to remedy this by delving into rich living in Richistan: A Journey Through the American Wealth Boom and the Lives of the New Rich (Crown, 2007). Like any group, the rich has its share of great people, lucky people, insecure people, and jerks. Most seem like the rest of us, but with more money. The book is probably not that appropriate for the classroom. Understandably, it's more descriptive than theoretical, and it's all over the place in terms of coverage. Still, it contains some interesting stuff. Here's some of that:
$ Microsoft co-founder Paul Allen owns yachts measuring 198 feet, 300 feet, and 400 plus feet, the latter costing $250 million. Yacht owners can expect to pay 10% to 15% of the purchase price each year to operate and maintain the craft. In the next year or two, the world will see the first yachts that stretch past 500 feet—one is being built for the ruler of Dubai and another for a Russian tycoon.
$ The United States, for the first time in history, now has more millionaire households—about 10 million—than does all of Europe. India, with nearly four times the U.S. population, has less than 1% of America's millionaires—about 90,000—the same number as North Carolina.
$ Classic luxury car brands such as BMW, Mercedes, and Jaguar are now less in favor among the rich. One up-and-comer is the downscale Bentley Continental, starting at about $180,000.
$ The most prestigious watch among the rich is the Swiss-made Franck Muller. One Franck Muller model, the Aeternitas, tells the day, date, month, and moon phase for the next 1,000 years. It sells for $736,000, which would buy four Bentley Continentals.
$ The rich are bypassing traditional charities to fund projects directly such as wells and health clinics in Africa. Traditional charities don't like the trend.
$ Five times as many homes larger than 5,000 square feet were built in 2005 than in 1995.
$ In a 2005 study, fewer than half of the wealthy surveyed agreed that "wealth has made me happier." Ten percent of the men and 16 percent of women felt that wealth created more problems than it solved.