The Average Net Worth by Country Part 1: Introducing the x-y Diagram

Preliminary Analysis of the Forbes 2013 Worlds Billionaires Data

250.000

Combined Net Worth, y [$, trillions]

200.000

U = y/x Or, y = Ux Nigeria U = 10.4

A
Mexico

150.000

100.000

B
Nigeria

50.000

Saudi Arabia
0 4 8 12 16 20

0.000

Number of billionaires, x
Figure 1: Graphical representation of the data for the top three countries, Nigeria, Saudi Arabia, and Mexico, by average net worth U = y/x. The average net worth of all the billionaires, worldwide, or in a single country, is the ratio U = y/x, where x is the number of billionaires in a country and y is their combined net worth. Now consider Nigeria, with only two billionaires, Aliko Dangote with a net worth of $16.1 billion and Mike Adenuga with a net worth of $4.7 B. Nigeria tops the 64 country list, see Ref. [1] and also Table 1, based on the astounding average net worth U = $10.4 billion = (16.1 + 4.7)/2 = 20.8/2.
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Table 1: Average Net Worth of Billionaires by Country Full listing of billionaires and combined net worth
Rank by U = y/x Avg. NW 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 26 27 28 29 30 31 32 Country Nigeria Mexico Saudi Arabia Colombia Sweden France Georgia Germany Spain Hong Kong Italy Malaysia Cyprus Chile Ireland USA Brazil Russia Switzerland Thailand Czech Rep South Africa Philippines Netherlands India Australia Austria United Kingdom Venezuela Ukraine Canada Singapore Billionaires N=x 2 15 8 5 14 24 1 58 20 39 23 10 3 14 5 442 46 110 13 10 4 6 11 6 55 22 8 37 1 10 29 10 Combined net worth UN = y 20.800 148.500 55.552 34.500 88.298 142.848 5.300 296.264 99.960 193.089 112.907 48.750 13.650 61.348 21.900 1872.312 189.290 427.130 50.297 38.600 14.900 22.002 39.853 21.252 193.600 73.106 26.504 121.101 3.267 32.100 92.046 31.600 Average net worth U = UN/N = y/x 10.400 9.900 6.944 6.900 6.307 5.952 5.300 5.108 4.998 4.951 4.909 4.875 4.550 4.382 4.380 4.236 4.115 3.883 3.869 3.86 3.725 3.667 3.623 3.542 3.520 3.323 3.313 3.273 3.267 3.210 3.174 3.160
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Rank by U = y/x Avg. NW

Country

Billionaires N=x

Combined net worth UN = y

Average net worth U = UN/N = y/x

33 Japan 22 68.398 3.109 34 Finland 1 3.100 3.100 35 Swaziland 1 3.100 3.100 36 Denmark 6 18.498 3.083 37 New Zealand 3 9.150 3.050 38 Belgium 2 5.800 2.900 39 Greece 3 8.601 2.867 40 Norway 6 17.100 2.850 41 Portugal 3 8.550 2.850 42 Taiwan 26 72.800 2.800 43 Israel 17 46.257 2.721 44 Egypt 7 18.550 2.650 45 Poland 4 9.800 2.450 46 United Arab Emirates 4 9.752 2.438 47 S. Korea 24 56.352 2.348 48 Lebanon 6 13.998 2.333 49 Peru 10 23.300 2.330 50 Argentina 5 11.100 2.220 51 Indonesia 25 55.250 2.210 52 Morocco 3 6.501 2.167 53 China 122 262.910 2.155 54 Angola 1 2.000 2.000 55 Kazakhstan 5 9.200 1.840 56 Turkey 43 74.218 1.726 57 St. Kitts & Nevis 1 1.500 1.500 58 Guernsey 1 1.500 1.500 59 Vietnam 1 1.500 1.500 60 Monaco 3 4.449 1.483 61 Kuwait 5 6.150 1.230 62 Romania 1 1.100 1.100 63 Belize 1 1.000 1.000 64 Nepal 1 1.000 1.000 The number of billionaires is obtained from Ref. [2], the Mapping of the Wealth, and the combined net worth x was computed from the average net worth y/x given in Ref. [1], The Average Billionaire Net Worth by Country.
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On a x-y diagram, see Figure 1, the average net worth U equals the slope of the ray, labeled A, which joins the (x, y) pair for Nigeria back to the origin (0, 0). The higher the slope, the higher the average net worth U = y/x. Saudi Arabia, with eight billionaires, has an average net worth U = y/x = $6.944 B, which is lower than the Nigerian average. Hence, the (x, y) pair for Saudi Arabia falls on the ray B, with a lower slope. The (x, y) pair for Mexico, with 15 billionaires, on the other hand, falls close to the extrapolation of the ray A passing through the Nigeria point. If two billionaires have a combined net worth of $20.8 billion, then 15 billionaires should have a combined net worth of (15/2) x $20.48 = $156 billion. The combined net worth of the Mexican billionaires is $148.5 billion. Hence, Mexico is ranked No. 2 in this list while Saudi Arabia is No. 3, see Table 1 prepared using the data in Refs. [1-3]. Table 2 lists the net worth of all 15 Mexican billionaires, obtained from Ref. [3] after sorting by country of citizenship. Table 3 lists the data for the Saudi Arabian billionaires.

Table 2: Mexican billionaires Combined net worth UN and Average net worth U
No. Uj No. Uj 1 73 11 1.9 2 18.2 12 1.8 3 4 5 6 7 8 9 16.7 9.9 6.6 5 4 2.5 2.4 13 14 15 ----1.5 1.4 1.3 Total UN = $148.5 B Average U = UN/N = 148.5/15 = 9.9 10 2.3 --

Table 3: Saudi Arabian billionaires Combined net worth UN and Average net worth U
No. Uj 1 20 2 13.5 4 5 6 7 8 6 2.6 2.3 2.2 1.95 Total UN = $55.55 B Average U = UN/N = 55.55/8 = 6.944 3 7 9 -10 --

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Combined Net Worth, y [$, billions]

400.000 350.000 300.000 250.000 200.000 150.000 100.000 50.000 0.000 0 10 20 30 40 50 60 70 80

UN = y = hx + c = 5.01x + 4.5 2 r = 0.9867

Germany

Mexico

Hong Kong

Number of billionaires, x
Figure 2: Graphical representation of the data for the top 15 countries, from Nigeria to Ireland in Table 1. The combined net worth UN (or y, plotted on the vertical axis) increases as the number of billionaires N in the country increases. The subscript N is used to call attention to the dependence of the combined net worth on the number of billionaires. Consider now the x-y plot for the top 15 countries in Table 1, from Nigeria to Ireland, which ranks just above USA (ranked 16). As the number of billionaires N in a country increases their combined net worth also increases, as already seen in Figure 1. However, with data for twelve more countries, we see a confirmation of the same general trend. The data for Germany, with the most bllionaires (N = 58) and Hong Kong, with 39 billionaires, and many other countries, fall on a nice upward sloping line with the equation y = hx + c. The numerical values of the slope h and the intercept c can be determined using linear regression analysis (least squares method, see Refs. [6, 7] cited, with a worked example). Thus, y = 5.01x + 4.5. The linear regression
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coefficient r2 = 0.9867 is quite high. For a perfect positive correlation r2 = +1.000 and all the points would fall exactly on the straight line. This linear relation also immediately leads to the following relation for the average net worth U = y/x = h + (c/x) = 5.01 + (4.5/x). In other words, as the number of billionaires x increases, the average net worth U = y/x will decrease and asymptotically tend to the limiting value of h = $5.01B, the slope of the straight line in Figure 2. This asymptotic behavior is illustrated in Figure 3.

Average Net Worth, U = y/x [$, billions]

14.0
12.0 10.0 8.0 6.0 4.0

U = y/x = h + (c/x) = 5.01 + (4.5/x) r2 = 0.9867

2.0
0.0 0 10 20 30 40 50 60 70

Number of billionaires, x
Figure 3: The asymptotic limiting value of the average net worth U = y/x as the number of billionaires x increases. The asymptotic limiting behavior observed in Figure 3 is actually a consequence of the linear relation y = hx + c between the combined net worth UN = y and the number of billionaires N in a country. Notice that the data for the larger values of N confirms this limiting value deduced. The 58 German billionaires have an average net worth U = $5.08 billion. For the 39 Hong Kong
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billionaires, U = $4.95 B, see also the data highlighted in the last column of Table 1. Also, as the number of billionaires decreases, the average value U = y/x will increase since both h and c are positive. This explains the higher averages obtained for countries like Nigeria, Saudi Arabia, and Colombia, with fewer billionaires.

Average Net Worth, U = y/x [$, billions]

16 14 12 10 8 6 4 2 0 0 5 10 15 20 25 30 35

Nigeria

Mexico

U = y/x = h + (c/x) = 5.107 + (3.72/x) r2 = 0.879

Number of billionaires, x
Figure 4: The decreasing average net worth U = y/x with increasing billionaires, observed in countries with 14 or fewer billionaires. Although some data points for higher N are included, the regression equation was developed with N < 15.

A slight increase in the slope h is observed if we consider the data for countries with a maximum of 14 billionaires (among the top 15 in Table 1). This eliminates ranks 2, 6, 8, 9, 10, 11 (Mexico, France, Germany, Spain, Hong Kong and Italy). The results are illustrated in Figures 4 and 5. This is
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equivalent to zooming into the earlier graphs to survey lower billionaire levels. The situation at the higher billionaire levels will be considered in a separate article, in preparation.

Combined Net Worth, y [$, billions]

160.0

Mexico
140.0 120.0 100.0 80.0 60.0 40.0 20.0 0.0 0 2 4 6 8 10 12 14 16 18 20

UN = y = hx + c = 5.107x + 3.72 r2 = 0.879

Spain

Malaysia n

Number of billionaires, x
Figure 5: The combined net worth UN = y increases with increasing billionaires. Here we consider data for countries with 14 or fewer billionaires. Although some data points for higher N are included, the regression equation was developed with N < 15. Finally, the opposite trend of increasing average net worth U, with increasing billionaires is also observed if we examine the data for all 64 countries. This was also observed in the analysis of the worldwide data for the years 2000-2013 and the US data for the years 2009-2013, see Refs. [8,9]. A more complete analysis of the data in Table 1 will be presented in Part II of this analysis, to be presented shortly. A list of related articles on the analysis of the Forbes billionaires data is also included.
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Reference List
1. Average Billionaire Net Worth by Country: Full list, by Edwin Durgy, March 13, 2013, http://www.forbes.com/sites/edwindurgy/2013/03/13/averagebillionaire-net-worth-by-country-full-list/ 2. Mapping the Wealth of the Worlds Billionaires, by Luisa Kroll, March 9, 2013, http://www.forbes.com/sites/luisakroll/2013/03/09/mapping-thewealth-of-the-worlds-billionaires/ 3. The Worlds Billionaires, The Richest People on the Planet 2013, by Lusia Kroll and Kerry A. Dolan, March 4, 2013, http://www.forbes.com/billionaires/ 4. Inside the 2013 Billionaires List: Facts and Figures, by Luisa Kroll, March 4, 2013, http://www.forbes.com/sites/luisakroll/2013/03/04/inside-the-2013billionaires-list-facts-and-figures/ 5. The First Rich List, by Arik Hesseldahl and Claudia DeMairo, September 27, 2002, http://www.forbes.com/2002/09/27/0927richestphotos.html see also http://www.forbes.com/2002/09/27/0927richest.html The combined fortune of the 30 richest was $3,680,000,000 ($3.68 B) and the average net worth was $0.123 B ($122,666,666). The full list of the 30 richest men in 1918 may be found on page 15 of 17 of this article. 6. Legendre, On Least Squares, English Translation of the original paper in French, http://www.york.ac.uk/depts/maths/histstat/legendre.pdf 7. Line of Best-Fit, Least Squares Method, see worked example given here http://hotmath.com/hotmath_help/topics/line-of-best-fit.html The formula for h used in this example is an actually approximate one and was used, before the advent of modern computers, since it only involves the determination of x2 and xy and the sum of all the values of x, y, x2 and xy. The exact formula is given below, with xm and ym denoting the mean or average values of x and y in the data set, and ym = hxm + c since the bestfit line always passes through the point (xm , ym).

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h = (x xm)(y ym)/ (x xm)2 Determine the deviations of the individual x and y values from the mean, or average, (x xm) and (y ym). Determine the product (x xm)(y ym) and their sum. This gives the numerator in the expression for h. Determine the square (x xm)2 and the sum. This gives the denominator in the expression for h. This also fixes the intercept c via ym = hxm = c . Then, using the regression equation, determine the predicted value yb on the bestfit line and the vertical deviation (y yb) and the squares (y- yb)2. The sum of these squares is minimum. This can be checked by assigning other values for h (using any two points) and allowing the graph to pivot around (x m, ym). The regression coefficient r2 = 1 - { (y- yb)2 / (y- ym)2 } is a measure of the strength of the correlation between x and y (or y/x versus x). For a perfect correlation, when all points lie exactly on the graph, r2 =+1.000. 8. The Recent Growth in the Average Worth of US Billionaires (09-13) A Curious Limits to Growth Revealed Again, Published March 18, 2013 http://www.scribd.com/doc/131005255/The-Recent-Growth-in-theAverage-Worth-of-US-Billionaires-%E2%80%9909-%E2%80%9813-ACurious-Limits-to-Growth-Revealed-Again 9. Growth in the Combined Net Worth of Billionaires from 2000-2013: An Interesting Limits to Growth is Revealed, Published March 15, 2013, http://www.scribd.com/doc/130517722/Growth-in-the-Combined-Net-Worthof-Billionaires-From-2000-2013-An-Interesting-Limit-to-Growth-is-Revealed

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Related Articles on the Forbes Billionaires List

1. The Average Net Worth by Country, Part 1: Introducing the x-y Diagram, Preliminary Analysis of the Forbes 2013 Worlds Billionaires Data, Published March 19, 2013, http://www.scribd.com/doc/131193521/The-Average-Net-Worth-byCountry-Part-I-Preliminary-Analysis-of-the-Forbes-2013-Billionaires-Data 2. The Recent Growth in the Average Worth of US Billionaires (09-13) A Curious Limits to Growth Revealed Again, Published March 18, 2013 http://www.scribd.com/doc/131005255/The-Recent-Growth-in-theAverage-Worth-of-US-Billionaires-%E2%80%9909-%E2%80%9813-ACurious-Limits-to-Growth-Revealed-Again 3. Quantitative Comparison of the Billionaires in the Forbes Hall of Fame, Published March 17, 2013, http://www.scribd.com/doc/130826078/Quantitative-Comparison-of-theBillionaires-in-the-Forbes-Hall-of-Fame 4. Growth in the Combined Net Worth of Billionaires from 2000-2013: An Interesting Limits to Growth is Revealed, Published March 15, 2013, http://www.scribd.com/doc/130517722/Growth-in-the-Combined-Net-Worthof-Billionaires-From-2000-2013-An-Interesting-Limit-to-Growth-is-Revealed 5. Growth of Billionaires Worldwide and in the USA: Analysis of the number of billionaires data since 1982, Published March 14, 2013, http://www.scribd.com/doc/130377891/The-Growth-of-BillionairesWorldwide-and-in-USA-Analysis-of-the-data-since-1982 6. Countries with the most billionaires in the 2013 Forbes Billionaire List, Published March 9, 2013, http://www.scribd.com/doc/129406030/Countrieswith-Most-Billionaires-in-the-Forbes-2013-Billionaires-List 7. Average worth of the Top 10 Billionaires in a Country, Published Mar 11, 2013, http://www.scribd.com/doc/129863162/Average-Worth-of-the-Top-10Billionaires-in-a-Country 8. Per Capita Trends for Ultra High Net Worth Residents in US Cities, Published March 11, 2013, http://www.scribd.com/doc/129722844/Per-CapitaTrends-for-the-Ultra-High-Net-Worth-UHNW-Residents-in-US-Cities

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9. Europe and Asia-Pacific billionaires in the Forbes 2013 list: Whats the difference? Published March 10, 2013 http://www.scribd.com/doc/129634796/Europe-and-Asia-Pacific-Billionairesin-the-2013-Forbes-List-What-s-the-difference 10. The Rate of Creation of Billionaires: Analysis of the Forbes 2013 Billionaire List, Published March 6, 2013, http://www.scribd.com/doc/128944910/The-Rate-of-Creation-ofBillionaires-Analysis-of-the-2013-Forbes-Billionaire-s-List 11. Billionaires and Calculus: Ratio versus Rate of Change Is Einsteins Work Function Observed In this Problem? Published March 5, 2013. http://www.scribd.com/doc/128610494/The-Forbes-Billionaires-andCalculus-Is-Einstein-s-Work-Function-Observed-Here 12. Billionaires and the Population Law: Analysis of the 2013 Forbes Billionaires List, to be published shortly.

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About the author V. Laxmanan, Sc. D.

The author obtained his Bachelors degree (B. E.) in Mechanical Engineering from the University of Poona and his Masters degree (M. E.), also in Mechanical Engineering, from the Indian Institute of Science, Bangalore, followed by a Masters (S. M.) and Doctoral (Sc. D.) degrees in Materials Engineering from the Massachusetts Institute of Technology, Cambridge, MA, USA. He then spent his entire professional career at leading US research institutions (MIT, Allied Chemical Corporate R & D, now part of Honeywell, NASA, Case Western Reserve University (CWRU), and General Motors Research and Development Center in Warren, MI). He holds four patents in materials processing, has co-authored two books and published several scientific papers in leading peer-reviewed international journals. His expertise includes developing simple mathematical models to explain the behavior of complex systems. While at NASA and CWRU, he was responsible for developing material processing experiments to be performed aboard the space shuttle and developed a simple mathematical model to explain the growth Christmas-tree, or snowflake, like structures (called dendrites) widely observed in many types of liquid-to-solid phase transformations (e.g., freezing of all commercial metals and alloys, freezing of water, and, yes, production of snowflakes!). This led to a simple model to explain the growth of dendritic structures in both the groundbased experiments and in the space shuttle experiments. More recently, he has been interested in the analysis of the large volumes of data from financial and economic systems and has developed what may be called the Quantum Business Model (QBM). This extends (to financial and economic systems) the mathematical arguments used by Max Planck to develop quantum physics using the analogy Energy = Money, i.e., energy in physics is like money in economics. Einstein applied Plancks ideas to describe the photoelectric effect (by treating light as being composed of particles called photons, each with the fixed quantum of energy conceived by Planck). The mathematical law deduced
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by Planck, referred to here as the generalized power-exponential law, might actually have many applications far beyond blackbody radiation studies where it was first conceived. Einsteins photoelectric law is a simple linear law and was deduced from Plancks non-linear law for describing blackbody radiation. It appears that financial and economic systems can be modeled using a similar approach. Finance, business, economics and management sciences now essentially seem to operate like astronomy and physics before the advent of Kepler and Newton. Finally, during my professional career, I also twice had the opportunity and great honor to make presentations to two Nobel laureates: first at NASA to Prof. Robert Schrieffer (1972 Physics Nobel Prize), who was the Chairman of the Schrieffer Committee appointed to review NASAs space flight experiments (following the loss of the space shuttle Challenger on January 28, 1986) and second at GM Research Labs to Prof. Robert Solow (1987 Nobel Prize in economics), who was Chairman of Corporate Research Review Committee, appointed by GM corporate management.

Cover page of AirTran 2000 Annual Report

Can you see that plane flying above the tall tree tops that make a nearly perfect circle? It requires a great deal of imagination to see and to photograph it.

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