WASHINGTON: If you want to be in the top 1 per cent of the world, the most important thing you can do is be born in a rich country.

But if you want to be in the top 1pc of a rich country, that takes a little more doing.

How much more? Well, economist Branko Milanovic has crunched the Luxembourg Income Study’s numbers and come up with how much, on average, a person in his or her country’s most exclusive percentile makes after taxes and adjusted for the cost of living.

Now, there are a couple of words you should pay particular attention to here.

First, these numbers are for a person, as in you, but not you and everyone else you live with. So for a typical family of four, you’d have to multiply these figures by four to figure out what the top 1pc make.

Second, these are for after-tax income, not including capital gains. That means if you live in New York, where city, state, and federal taxes can eat up half the highest-earners’ paychecks, you’d have to double these numbers.

More than that, actually, because selling stocks, bonds, and real estate is income, and it’s a big part of the top 1pc’s income — 36pc, to be exact — but it’s not included in the numbers here.

And third, these aren’t in actual dollars but rather in purchasing power parity, or PPP, dollars, which account for the fact that local goods and services, like, say, a haircut, are more expensive some places. So you need to make more to live the same.

The results, as you can see below, are that the top 1pc make between $70,000 and $170,000 in PPP terms in rich countries — or at least richish, depending on how you classify Greece. Why is there so much variation? It’s not just a matter of how much income a country has, but also how evenly distributed, or not, that income is.

Consider Brazil. It has so much inequality that its top 1pc make more than much-richer Italy’s do. Even then, though, it’s important to remember that not all after-tax dollars are created, well, equal.

Would you rather make $151,000 in the United States, where health care costs more and the safety net covers less, or $95,000 in Germany?

It’s not as obvious as it seems. Sure, you’d have less money to spend in the second case, but you’d also have less you’d need to spend on. That’s not to say that one is better than the other, just that you need to keep that in mind when you make these kinds of comparisons. (China and India aren’t included here because there aren’t reliable numbers for those countries).

But, remember: You don’t need to be anywhere close to your country’s top 1pc to be in the world’s top 1pc. It takes just $43,000 in PPP terms — about $53,000 in unadjusted ones — to be better off than 99pc of everybody else on the planet.

But at $200,000 for a family of four, that’s just upper-middle class in America.

There’s nothing luckier than being born at the right time, in the right place, to the right parents.

By arrangement with Washington Post-Bloomberg News Service

Published in Dawn, June 7th, 2015

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