Do Billionaires Help or Hurt the Economy?

The extraordinary rising number of the super-rich has reignited the debate about whether wealth inequality facilitates or hinders economic growth. The question is unresolved in part because theories relate to the distribution of wealth, while data relate to the distribution of income. Using a measure of wealth inequality based on Forbes magazine’s annual world-wide listing of billionaires for 1987-2007, Sutirtha Bagchi and I find that the effect of politically connected billionaire wealth on growth is strongly negative, whereas the effect of politically unconnected billionaire wealth is indistinguishable from zero