Did you know that the most downwardly mobile members of society are millionaires?

It's true, and what's more, we have the data and math to prove it!

Our **featured chart** today was originally produced by Veronique de Rugy of the Mercatus Institute, which is based upon data from the IRS and analysis by the non-profit Tax Foundation.

Here, the story begins in 1998, when the IRS reports that there were approximately 675,000 tax returns with adjusted gross incomes of $1 million, or more.

[Side note: The **traditional definition** of a millionaire was someone who had accumulated at least one million dollars in total assets. However, since the word was first documented back in 1826, the effect of inflation is such that perhaps a more modern definition would be those who earn incomes of at least one million dollars in a year. In any case, $45,000 in 1826 dollars is **roughly the equivalent** of $1 million in 2012, going just by changes in the Consumer Price Index.]

Then, beginning in 1999, following the tax returns filed by the same people, the number of those with incomes over $1 million begins to drop dramatically - by nearly 50% in the first year!

And then, it continues, at an ever declining rate, until by 2006, some eight years later, of the 675,000 millionaires of 1998, only 17,000 made a million dollars or more, just 2.5% of the original number.

Expressed a different way, the probability that a millionaire after eight years would be able to make $1 million or more is just 2.5%!

And that's the math our newest tool tries to estimate! Just enter the number of years after which a millionaire has made a million dollars, and we'll give you the odds that they will have done it again!

In a sense, this is very similar to an **exponential decay function**, such as **might apply for things** like the decay of radioactive materials, or pesticides. Unlike those things however, the half life of a millionaire is much, much shorter!

One thing we do note from the actual data is that the number of millionaires after nine years begins to increase (38,000 represents 5.6% of the original number of millionaires in 1998). We suspect this is due to a combination of factors, including the effect of inflation from 1999 through 2007 and also the economic expansion that peaked in that year.

It would be very interesting to see how those millionaires have fared in the years since! How many would you think are still making over $1 million per year for the recession years of 2008 through today?

Time After Earning $1 Million | |
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Input Data | Values |

Number of Years After Having Earned $1 Million |

The Odds of Being a Millionaire | |
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Calculated Results | Values |

Odds of Earning $1 Million After Entered Number of Years |

*Political Calculations is a site that develops, applies and presents both established and cutting edge theory to the topics of investing, business and economics.*

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