Hello and welcome. You are listening to Patrick Boyle on Finance, a podcast exploring ideas from quantitative finance, examining events occurring in markets right now and financial history to see what lessons can be taken away, including interviews with some of the most interesting people in the world of finance. To learn more about the podcast, visit onfinance.org.

This Monday, the world's most influential leaders in politics and business will convene

in Davos, Switzerland for the annual meeting of the World Economic Forum.

This year's theme is Rebuilding Trust.

Over 100 governments, major international organisations, business leaders, youth activists,

social entrepreneurs and the media are expected to attend.

Every year to coincide with the start of the World Economic

Forum, the British charity Oxfam releases a report on inequality which always goes viral. Last

year the big headline was that the top 1% own almost half of the world's wealth, while the poorest half of the world own just

0.75% of it. The report is designed to grab your attention, and it does that very well. But

the statistics that they use are deeply flawed, as has been pointed out for years by journalists like Felix Sam and Ezra Klein,

Chris Giles and many more. If you look closely at the charts that Oxfam provide, which are based

on Credit Suisse data, you'll notice that the bottom 10% of the global wealth distribution contains a surprising number

of North Americans and Europeans, and that the next 10% contains hardly any.

On top of that, China appears to have no people whatsoever in the bottom 10%, and the vast majority

of Chinese people are in the top half of the

global wealth distribution.

So what exactly is going on?

How can so many of the poorest of the poor come from the United States, a rich country?

Well, the net worth calculation used in this data is assets minus debts, and

Americans and Europeans are the most likely people to be in debt, with mortgages,

student debt and credit card loans. But just because someone has debt doesn't mean that

...