The ERE Wheaton Scale

[Jin+Guice]

For your amusement: Bloomberg has put out a net worth scale

Scales on global net worth and income have always bothered me. In my experience, they always focus on the top part of the distribution (top 1-5%ish), which essentially encompasses middle class of the richest countries, maybe some of their poor, and maybe some of the middle class of the middle rich countries.

It's worth remembering that many people, even in the rich world, have a net worth of 0 or less. High net worth and high income are not the same thing.

The income calculators bother me too. An income of $7,000 a year income puts you in the top 20% according to global rich list. $7,000 is basically the minimum amount one can spend in a wealthy nation (honestly I would argue that this figure is probably higher).

There are a lot of data problems building the distribution at the bottom. What's the imputed rent on a subsistence farmers land? Does it make sense if it's 1/20th the absolute cheapest possible housing in the U.S.? However, it's kind of a fucking punt if your distribution ignores 80% of people in the world. I started a thread on this awhile back if people are interested in discussing and don't want to clog up the Wheaton Scale thread.

[7Wannabe5]

@jacob: Well, objectively the scale would obviously hold equally well for any type. Also, I know that I was comparing apples and oranges, because I was trying to get at something else.

First off, I would suggest that both Wheaton Scale and Systems Theory in general would likely be of most interest to NTs. On the website which describes the manner by which different types would survive post-apocalypse, it gives both INTJ and ENTJ high score for likely financial preparedness, but for ENTP it indicates "Boom/Bust" and for INTP it indicates "Understands high level economic theory, but has no money." I must admit that as an XNTP, my reality has almost always reflected a rough mix of these descriptions. So, I guess my point would be that there are differences in outcome based on factors other than not having a clue and it is likely that this could be generalized across different Wheaton Scale, but with different types having different outcomes. For instance, there could be genius level SF musicians who would have zero interest or knowledge in the topic of Wheaton Scales.

When I was helping my uber-wealthy friend figure out his soybean puzzle, I discovered that soybeans have a low germination rate and he had only attempted to test a few beans. All I had to say to him was "It's because they have a low germination rate." and he knew that his error was in only testing a few, and I knew that he would know that, because I know that he is VERY good at finance.

So, what I mean by remarking that Wheaton Scales might not so much apply to "P"s is that because we are more likely to go sideways from apples to oranges to grapes to bananas, maybe we think about the scales or experience them kind of differently. For instance, I can generally learn something of interest in short conversation with most other adults, because I can quickly "scan" for some realm(s) where that individual is at higher Wheaton level than me, at least in terms of experience. In fact, if it was a genius level musician with whom I was interacting, I would just listen to him play rather than even have a conversation. Etc. etc. etc.

[unemployable]

In order to follow the relative Wheaton structure of judging the other levels, I think the log base should be less than 10. This would create increase the resolution in terms of relating to people more than one LOW away. I find the social reaction aspect of the scale more useful than the Zipf's law form.

In Wheaton's resolution, those more than three levels away are unrelateable. I'd thus suggest setting the log base at 3 or 4 which would translate into 27 and 64 times more or less financial firepower respectively. To wit, if someone's firepower is ~3% of yours, you're probably in a different orbit.

My guess is that with a log base 3, 95% of the forumites fit with 1-1.5 wealth levels.

I think this is a "reasonable people can disagree" issue.

We can append a suffix to LOW to indicate a base other than 10, similar to what is done with "log" in math. So LOW[5] is the base-5 logarithm of worth. For base e we can use LOW[e] or perhaps LOWN, similar to "ln". My calculator only has ln, not log, so I have to compute log(x) by dividing ln(x) by ln(10) anyway.

Base 10 is nice because everything else we do is in that base so it's easy to estimate LOW to two significant figures. The fact that we refer to millionaires and billionaires indicates the public in fact already uses LOW on some level. KISS.

Here's another way of thinking of it. Take the LOW at which you start your adult life. For most of us this is between slightly negative and maybe 4. How many different LOW levels, and thus outlooks on money and wealth, can you reasonably expect to move through over your life? Well the LOWN of a million dollars is close to 14, but I don't feel like in going from zero to an entry-level millionaire anything about one's lifestyle changes as many as 14 times. My LOWN is 13 and it's like five or six at most. (Trying to pay off a modest amount of debt, then building a stash to keep the wolves at bay, then accumulating enough money that investment returns start to matter, then getting a decent job and turbocharging my savings, then quitting, then learning to live on a reasonable withdrawal rate, the last two kind of happening in tandem). That's five phases... and lo and behold my LOW is smack dab in the mid-5s. I can make differentiations with LOW that I can't do with LOW[5] or LOWN.

I agree most people here have LOWs in the high 4's to the low 6's, with the majority of those in the 5.3-5.9 range, except for younger posters earlier in the accumulation stage, and most of them will still be 4s. My "people I can relate to" index is in the same range, although I've met several 9-handle people professionally.

[unemployable]

BTW, is there a LOW above which money ceases to be a constraint with respect to ERE? That is, you follow ERE principles for reasons other than available wealth dictating you do so -- perhaps as an intellectual challenge. I'd say "cafeteria ERE", where you can pick and choose the parts of ERE you like, starts somewhere in the 5s with ERE not being applicable at all in the mid to high 6s.

This isn't related to LOW or your choice of base per se, but I do find it interesting to consider whether and how ERE is limited to a certain region of the wealth spectrum.

[7Wannabe5]

@unemployable:

Factorial number system is less arbitrary, because space is not preferenced to symbol. I like that way of thinking about it, because it's not just more, it's different. Also works better with jennypenny's 5+5=bananas concept.

This isn't related to LOW or your choice of base per se, but I do find it interesting to consider whether and how ERE is limited to a certain region of the wealth spectrum.

Well, I guess it would kind of depend on whether you think 0/10 = 0/10000000000.

[unemployable]

You mean the inverse gamma function? (Gamma is subtract 1 and take the factorial, so Γ(5) = 24.) That's viable but it results in the same granularity as LOW, so needless complexity. At wealth levels between $50k and the low millions, you're multiplying around 10 at each step (ten factorial is around 3.5 million), so most of us are simply in the 8-9-10 range rather than the 4-5-6 range. You get more granularity at lower levels, where it isn't necessary.

[Sathera]

I really liked that graphic, would love to see one like it fir FIRE or ERE.

[jacob]

@Sathera - Here you go viewtopic.php?p=125960#p125960

[7Wannabe5]

@unemployable:

More granularity at the lower levels is likely warranted if you look at the associated population numbers.

Also, e looks ugly in base 10 decimal form, but much more attractive or so very natural this way:




Obviously, base 10 is easy and arbitrary because humans have 10 fingers, but you wouldn't use it recreationally with intelligent life from another planet. When you use a factorial system, rather than an exponential base system, each space requires a new symbol (it must emerge), so at first you are wandering around with nothing but nothing, then you break through and up one more level and sometimes you got nothing and sometimes you got something, next level you got nothing, something, and more than something and also the nothing or something you had before.

IOW, if you use base 10, that's like you are starting out already quite wealthy with symbols, like a baby born to level 10 parents. The probabilities associated with that happening are baked right in clear sight when you use factorials.

Etc. etc. etc. I'm sure daylen could explain what I mean better.

[unemployable]

You know I only ever understand about half of what you write, and that post is no exception. I kind of prefer standard mathematical notation because like math itself, it's not open to interpretation.

[Jean]

I Can relate to what 7w5 is saying. I Always found weird that most metrics would put me at the top of the ere dick measuring contest, but everyone including myself feel like i know nothing. It's very difficult for intp to consciously progress in a choosen direction, because we hack the metrics, focus on apparently useless random shit, and then progress just seem to happen to us. I'm prety sure that even though they are rational, INTP are very likely to believe in irational stuff like gardian Angels or remembering wisdom from former life because of this way of learning.

[7Wannabe5]

@unemployable:

If you use 1!, 2!, 3!, 4!, 5! as column tops instead of x^0, x^1, x^2, x^3, x^4, x^5 then you are limited in how many symbols you can use in each column if you wish to preserve uniqueness. For instance, 3! = 6, and 4! = 24, so if you put a symbol for a number greater than 3 under the 3! column, the product would be equal to or greater than 24, so the number could be represented in more than one way. For instance, 1000 would equal 400. As with any base system greater than 10, you will eventually need more symbols than are provided by 0-9, so you have to use the something like the alphabet or "bananas", but with the factorial system the need for new symbols never ends. This article explains it better:

https://en.wikipedia.org/wiki/Factorial_number_system

As the article notes, using this system e is represented much more simply as 10.01111111.....and there are obviously all sorts of interesting things to do with this system since each column heading maps to a permutation. However, I can't figure out how to apply it to the odds of starting out born in a hut in Uganda and ending up level 10 wealthy, but I think maybe somebody else could do it.

[7Wannabe5]

@Jean:

I didn't know you were an INTP, but it makes sense. Why would anybody want to work any longer than it would take them to buy a forest?

[unemployable]

I don't see how that system provides new information or conveys existing information more insightfully.

I got bored with recreational mathematics in high school. Right about the time I got a math scholarship to college. My favorite useless-but-fun-to-play-with number base is phinary, fwiw.

[Jean]

Alcohol or attention turns me into an entp. I really need a master/teacher. Maybe a baby will do?

[Fish]

For anyone who wants to make their own Wheaton scale for some other domain than FIRE and travel, proceed as follows. [...]
3) Check to see if the difference between levels would be obvious to an outside observer. If so, stop. The table will not follow the Wheaton law because there's no mutual fog-of-comprehension. For example, there are no Wheaton levels of basketball or juggling. To a garage level player, Michael Jordan does not appear extreme or crazy. Rather he appears to be obviously good.

Based on this criteria I’d also argue that there are no Wheaton levels of net worth.

The more interesting question in my mind is whether a mainstream awareness of FIRE can break the fog of comprehension. At least in the ER-sphere I’m perceiving that Wheaton 3-4 types don’t look upon ERE with the same kind of disdain there was 5-10 years ago. Even if they don’t aspire to climb the ladder they clearly acknowledge that the higher levels are better. No more fog of comprehension?

1. http://www.early-retirement.org/forums/ ... 59004.html
2. http://www.early-retirement.org/forums/ ... 00142.html

[daylen]

The factorial number system is elegant mathematically/linguistically, but I am not sure it is practical for this use. The first ten symbols/places would cover almost everyone. 0 - 4 are a bit redundant and 5 - 9 are similar to log(10). Here is a list of how much each place can add to the running total. The maximum number [along with every number below it] that can be represented with n symbols is one minus row n+1. In opposition, a fixed base adds a new symbol each increment until the base is reached then repeats in the next place.

0x0! = 0
1x1! = 1
2x2! = 4
3x3! = 18
4x4! = 96
5x5! = 600
6x6! = 4320
7x7! = 35280
8x8! = 322560
9x9! = 3265920

Each place has a different base/radix so symbols emerge as you count higher. For instance, you can count to 3265920 - 1 = 3,265,919 which is 8876543210 in the factorial number system without needing a 9 (tenth symbol). Adding one would give you .. 10 + 8876543210 = 9000000000

Mixed radix numberal systems are used more than you might expect. Time is such an example, ( ... 365 days, 24 hours, 60 min, 60 sec, ... ). Coordinates are another, ( degrees, minuets, seconds ). This is a topic that would be seen in an introductory abstract algebra or number theory class. The same math that is foundational to theoretical computer science. Especially to cryptography and communication theory. Sending messages reliably across a channel with random noise is an important problem in the modern world given the stakes associated with miscommunication. During WW2, a cascade of nukes were nearly detonated due to miscommunication.

Hence, I am not sure recreational is an accurate descriptor but it is fun.

[7Wannabe5]

Thanks daylen! I knew you could explain it better.

I agree that it is not the most practical system for description of hierarchy of net worth. I was thinking more about a way to exhibit the quality of 5+5= bananas that jennypenny suggested might apply to Wheaton scale. Obviously, instead of the digits to which we are accustomed, you could use any symbols. I frequently teach very young children, so it's easier for me to remember how humans learn very simple concepts. You could tell a 4 year old that 5+5= bananas, but when you attempt to teach somewhat older children about base systems other than 10, I think it is confusing in the same way as moving from one level to another on Wheaton scale.

As Fish remarked, Net Worth in $$ is a dubious candidate for Wheaton scale, but I think if it was expanded to All Possible Forms of Capital in PP$$, it might be more interesting. So, at the lowest level = 1!, maybe you are a newborn in Sub-Saharan Africa, and your only options are 1= you have a mother or mother-substitute (bottle of enfamil) available to you today (IOW, you have access to this quantity of wealth) = $1 PP OR option 0= you are dead. There is no Option 2 for you. If you manage to gain the strength and skill necessary to forage some food for yourself while still retaining the back-up capital of a mother, then you would have moved to the second level =2!. Both options would have to fail in order for you to fall to 0=dead. So, if you imagine somebody like my 79 year old multi-millionaire friend, it would be like this mountain of options or possibilities collapsing into 0s as he faces his mortality and flashes back to being a healthy, young 10 year old boy practicing baseball with a stick as he herded the cows along the roadside back to the farm.

[jacob]

Based on this criteria I’d also argue that there are no Wheaton levels of net worth.

I'd agree to disagree, but ...

I'd argue that there's still a fog of comprehension even if we can put a number on it. We can also put a number on the distance from the earth to sun but that doesn't mean that we really grok how far it is using concepts that are familiar to us. For example, I know how many hours it takes to drive from Chicago to New York, but I have no idea how long it would take to "drive" to the sun. Even though I can of course calculate it.

Lets try the wealth scale in terms of stacks of Washington portraits. Using freedom units (my conversion might be off), I get ...

$1,000 = 4.3 inches
$10k = 43 inches
$100k = 36ft
$1M = 360ft
$10M = 1200yd
$100M = 6.8 miles
$1B = 68 miles
$10B = 680 miles
$100B = 6800 miles

In that sense, I think it's just about possible to comprehend a stack of dollar bills that's 100x larger or 100x smaller than one's own. Beyond that the remaining descriptive words are enormous and irrelevant respectively. To wit, this is a six-fig forum, so LOW=5ish ... and occasionally we like to talk about how crazy it is when people don't have a $400 emergency fund. That's LOW=1ish. We also talk about how fatFIREs aiming for 10M are overdoing it and just wasting money and that's LOW=7ish.

Also see the cries for a wealth tax, etc. that are typically/"democratically" directed at people about +3 LOW away from the average voter and sold as "it's only going to affect people you've never met."

So while we can put a number on the networth, we don't understand what's going on. Perhaps this is similar to Michael Jordan. We understand that he scores a lot of points but we don't understand what's going on under the hood.

I do realize that this goes around my "rule" but I don't think the rule should constrain what we can make scales about... mainly because I like scales and maps.

[jennypenny]

Aren’t you (all) talking about a Wheaton scale of power/influence, not net worth? It could be applied to any of the types of capital a person can accumulate, making the comparisons apples to apples. It seems to me the point of all the attempts at formulas is to infer how much influence or power one can exert with the amount of capital they possess.

It’s not limited to wealth either. Socially astute people can wield great power over others. One can also affect others through what they produce. Frank Lloyd Wright’s work is an example of material works that influence others while Jacob’s work is an example of how intellectual works can influence people. Lots of apples to consider.

It’s also a combination of skill and capital. Having less capital but knowing how to use it can make one more powerful and the fixed ‘net worth’ determination less relevant. The higher levels would be able to web their ‘apples’ to exert more influence than would be expected. They might be able to affect legislation, get favorable rates at banks, get companies to create jobs for them or their families, get invitations to the ‘right’ events, etc.

To my mind, it’s basically Wheaton levels of power for each type of capital (applied similarly to permaculture zones) all the way up. We can 'put a number' to any of the types of capital to help understand the scale, but the influence they exert is/should be what is being judged on the Wheaton Scale IMO. Having a boatload of only one type of capital, no matter how much, seems self-limiting to me.