This all adds up to a more conservative investment strategy for wealthy black Americans. But as the study points out, that actually makes a lot of sense – given that even at the top of the economic ladder, black Americans still find themselves in a precarious position.
Consider some other findings from Brandeis University’s Institute on Assets and Social Policy. In 2009, 57% of the top-third of black Americans had been in that economic bracket since 1984. But 8% had fallen into the bottom third. Those numbers for the richest white families? 73% and 1%, respectively.
A 2003 study out of NYU, by Dalton Conley and Rebecca Glauber, showed similar findings: that 60% of white families who were in the top quartile of wealth in 1984 were still there in 2003 – but that figure for black families was only 24%.
Another possible explanation for black families taking fewer financial risks: they have less financial support from the previous generation to rely on. Only 7% benefit from an inheritance; but 36% of white families do, according to the Panel Study of Income Dynamics. And white families’ inheritances are about 10 times as big. For these reasons and more, it makes sense for a wealthy black person to be conservative with his or her investments.
What is less easily explained away is the much lower rates of business equity among black business owners. Since both the wealthiest black people and similarly wealthy white people are equally likely to be running their own business, why does the white group have so much more equity?
One possible explanation floated by the Credit Suisse/Brandeis researchers is that whites have more access to start-up capital when they found their businesses, which translates into greater business success down the line. (This hypothesis is based on findings by economists Robert W. Fairlie and Alicia M. Robb.)
The upshot is that black and white families’ wealth tracks about the same to the 50th percentile, and then whites’ wealth takes off exponentially. In America, in other words, the super-rich are also super-white.