Dollars & Sense: What do rich people know that poor people don’t?

Monday, 13 October 2025

Senior business reporter Rob Stock answers your money questions. Got a question for Sunday magazine? Email it to sundaymagazine@stuff.co.nz

QUESTION: What do rich people know that poor people don’t?

ANSWER: My glib answer is: It’s good to be born rich.

Between developed countries income mobility varies quite a lot, but the people with the highest chance of dying rich are those who are born rich.

“In no country in the world would that not be true,” says University of Auckland economics associate professor Ryan Greenaway-McGrevy, an income mobility expert.

The United States, where “wealth is essentially dispensed as a lottery of birth” (thanks comedian John Oliver for that description), and the United Kingdom, “2000 years of Upper Class Idiots in Charge” (thanks historian John O’Farrell) have lower levels of intergenerational income mobility than New Zealand, Greenaway-McGrevy says.

Intergenerational income mobility is fancy phrasing for children earning significantly more, or less, than their parents.

Scandinavian countries (socialist paradises with a keen appreciation of entrepreneurs, economics, vast oil fields, and limited liability companies) have more income mobility than New Zealand.

Why the differences?

Wealth redistribution through taxes into things like health, welfare, housing and education are Scandinavia’s secret sauce, Greenaway-McGrevy says.

Wealthy people in New Zealand are less troubled by wealth redistribution.

Many Kiwis may also be innocently deluded into thinking there’s more income mobility than there really is. Middle New Zealand has quite a lot of income mobility, Greenaway-McGrevy says, but people only tend to bounce around between the upper and lower ends of the middle range.

Max Rashbrooke, author of Too Much Money, says interviewing rich people showed him the rich don’t actually realise how privileged they are, or how poor many of their country people are. “They don’t know how fortunate they are,” he says.

For Rashbrooke and Greenaway-McGrevy the answer to your question is: It’s not what the rich know, but who they know.

Rich people cluster together in rich areas, able to afford the houses. They network. Their children are schooled together. They get better educations, better opportunities, they see what rich people do to be rich. They learn to live, dress, and behave like rich people.

“They know the codes,” Greenaway-McGrevy says.

There’s a reverse born poor effect, which is why Rashbrooke says wealth and income is “very sticky” at the two ends of the spectrum.

But there are some things the rich do know.

They know wealth and inheritance taxes are bad, and have political parties to oppose them.

They draw a lot of “income” from untaxed sources like property, and they’re not really troubled by little details like house prices.

I once saw a court actually suppress information on such hand-me-down wealth. It involved a born-rich business person getting millions from a family trust to buy a mansion outright.

The rich can also afford, and know the value, of paying advisers to increase their investment success, and minimise taxes.

They have paid help from gardeners, nannies, cleaners, and cooks, don’t waste valuable money-making time on the dull stuff that saps other people’s energies.

I know this answer is a bit galling to hear, but you must make of it what you will.

Disclaimer: The information in this column is provided for general information only and is not intended as financial advice. If you require expert advice we encourage you to seek assistance from a professional adviser.