Authors: Takao Oba (Project Lead), Daniel Neufeldt, Rebekah Limb, Manasi Indolikar, Dhruv Krishan
Billionaires have long been a subject of fascination for many people around the world. How did they amass such incredible wealth? What sets them apart from the rest of us? While there are many theories and speculations about what makes billionaires successful, recent years have seen a surge in data-driven research aimed at understanding the habits and traits of the world’s wealthiest people.
In this article, we will explore the fascinating world of billionaire data. Drawing on a range of sources, from interviews with successful entrepreneurs to in-depth analyses of financial data, we will uncover some of the key patterns and insights that can be gleaned from studying billionaires. From the daily routines of the super-rich to the commonalities that exist across different industries, we will examine the data that reveals what it takes to become a billionaire, and what lessons we can all learn from the world’s wealthiest individuals.
Based on the graph above, we see that the industry with the highest frequency of wealth is finance, with technology coming in at a close second then all the other industries within marginal distance of each other, completely separated from the first two. Furthermore, we see a huge jump in frequency of about 200% from the rest of the industries to technology and finance, which just goes to show the stark difference is in the amount of wealth in these different industries.
In this graph, we see a large spike in terms of wealth with respect to Robert Kuok in the shipping and property industry. Furthermore, we do not see a large spike in the frequency of any of the industries, which contradicts the previous graph that showed a large spike in the finance and technology industries.
In the above graph, we see two large spikes in the cryptocurrency exchange industry which can be attributed to the recent boom of the crypto industry in the past few years. Furthermore, there is less diversity in industries compared to the previous graph, which indicates that these newer younger billionaires are all participating in very few select industries. Lastly, apart from the large spike of SBF (acquired through fraud), everyone is pretty much even, meaning that there is not much disparity between the billionaires compared to the older billionaires with vast differences.
In this project, I decided to examine what was the most important aspect that went into being a billionaire. For the first part of my analysis, I decided to observe the general wealth distribution of the billionaire 500 dataset. I saw that the distribution was very skewed to the right. This means that a large majority of the billionaires are actually relatively towards the bottom echelon of wealth. I then looked at the distribution of industry amongst the billionaires and found that the top three industries were technology, industrial, and finally diversified. This makes sense because the field of technological advancements and industrialization are both essential in economic prosperity.
Because of the ever-changing world and constant improvements in innovation, there is a lot of potential to achieve success in technology and industrial industries. The world will always push to improve technology, such as advancements in AI and machine learning, semiconductors, and smarter devices; and industry will always have demand as companies need materials to do things like creating products or building facilities. Diversified industry can also be important as it fills the gaps that technology and industry cannot.
Another indicator that we can observe is location. I looked at the wealth distribution based on country and the graph very clearly depicts the United States as the country with the most billionaires. There can be a few reasons for this that we can dive into. The first reason is that the United States economy is very good as the import-export relationship is very strong. The United States also has many tech-based companies based there, which we know is the leading industry in wealth. A reason that the United States comes up so much can also be explained because of the stock market, which is based in New York. We can see that the fifth highest industry is Finance, so this can also be a place where a lot of the billionaires in the United States come from.
Predicting Future Growth of different levels of Billionaires
Once an individual reaches billionaire status it is equally integral to dive into how they either maintain, grow, or decline in the future. Especially with the access to exclusive investment opportunities, higher level networking, and the diversification through investments, already existing billionaire’s wealth has the potential to grow exponentially. For this analysis, we looked at the global billionaire wealth from 2002 to 2022 to sift through 20-years of insights into the world’s most wealthy individuals.
We examined the annual income of all the individuals as a time series dataset and chose to dive further into the top 2 individuals with the highest cumulative annual income in the past 20 years: Bill Gates, Microsoft Founder, and Warren Buffett, CEO of Berkshire Hathaway. We then compared their time series to the bottom 2 individuals with data for the 2002–2022 time span Lily Safra, a philanthropist, and Morris Kahn, an investor and CEO of Amdocs.
To predict the future growth or decline of these individuals, we implemented a classic time series forecasting model: Holt Winters Exponential Smoothing, which uses an exponentially weighted moving average to smooth and fit a time series, and make a trend prediction for 8 years ahead.
As one can see in the figures above for the top two wealthiest individuals, the smoothing model predicts a steep positive trend for both Bill Gates and Warren Buffett annual income time series. Moreover, Gates’s 8 year ahead forecast trend has a higher slope value than Buffett from the exponential smoothing algorithm, predicting a larger future growth rate.
Next, in the figures above for the bottom two billionaire’s in the dataset, we can see clearly that their annual income has a general decreasing trend from 2002 to 2022. Furthermore, the 8 year ahead forecast for both Safra and Kahn appears to have a steep declining slope, predicting a decline in their yearly annual income rate.
This analysis shows us that the level of billionaire wealth can play a role in their future growth. There can be many factors that contribute to this such as stochastic economic conditions, and failed business ventures leading to an overall decline in their wealth growth rate. However, with wealthier individuals that have the opportunity for more investments, connections, or philanthropic activities contributing to their reputation, their annual income can increase year over year, leading to exponential growth, and increasing the wealth gap among the top billionaires.