Poverty, Wealth and Expats

I'm in the top 1% for Ecuador, but I certainly do not consider myself wealthy. Why? Because by comparison I know a wealthy class exists here whose wealth is considerably more. If by wealthy we're talking about income, properties, and other assets. With regards to salaries, we also have to keep in mind that Ecuadorians receive a lot of money by remittances and these sums compensate for lower salaries. I have seen numbers indicating there are 2.5 million Ecuadorians living abroad.

I live in a nice and simple house that I rent in Quito. The wealthy, like my friend's parents, own million dollar homes in Cumbayá and some even have houses on the coast as a secondary residence. The wealthy can walk into any store at Quicentro (North) and buy what they want. How many expats have walked into Tiffany & Co and bought something? The wealthy drive Ferrari, Aston Martin, Porsche and other luxury cars.

antialiased wrote:

This topic has come up a number of times yet I (usually) only rely on personal observations to make the case that the vast majority of N. American expats would be considered wealthy.  However, today I decided to actually collect statistics/data.  Below are some stats about poverty and wealth in Ecuador.

Ecuador Data:
Bottom 68% = income below $10/day ($300/month)*
Bottom 24% = income below $4/day ($120/month)*
Top 10% = income over $8k/year ($670/month)**
Top 1% = income over $37k/year ($2k/month)**
Top 0.1% = income over $100k/year ($8k/month)**

US Data (for comparison)***:
Top 10% = income over $120k/year ($10k/month)
Top 1% = income over $390k/year ($30k/month)
Top 0.1% = income over $1.7m/year ($140k/month)

In other words, by any rational metric most expats are certainly far from "average" and would likely be considered wealthy/living a wealthy lifestyle.  Not saying all... I wish I was in the top 10 as opposed to the median.  However, most others I've spoken with have been at least top 10% if not in or near the top 1%.

* Note: In rural areas, the percentage living below $300/month climbs to 78% while in cities it falls to 65%.  https://tradingeconomics.com/ecuador/po … data.html. (Data from World Bank)

** http://pubdocs.worldbank.org/en/1853914 … uador.pdf. Table 6, p. 48.

*** https://taxfoundation.org/summary-lates … -tax-data. Table 7. (Data from IRS).

Antialiased, thanks for doing the research on this! it puts a lot of things in perspective for me.

For example, my Ecuadorian girlfriend's income puts her in the top 10% of Ecuadorian earners. As it does for her mom (passive income, as she's a landlady) and her brother, who is a young lawyer.

But it also puts my Guayaquil neighborhood in perspective too. I have characterized it as working class, because from my US perspective, it is. But I might have that observation wrong. My guess is that what i consider to be working class puts one on the top 60% of wage earners-- below the median, but not in the bottom 20%. And if my girlfriend's family are similar to their neighbors, and not outliers... this neighborhood is more like middle class Ecuadorian, if not upper-middle. also, tonight i listened to them talk about the upcoming elections, and who they support. They are supporting different parties associated with the right. And it's unusual for the working class to support the right wing. Again, I'm just guessing here.

But of course, Income is only one part of the formula that determines wealth. There's also assets and liabilities (debts).

vsimple wrote:

I'm in the top 1% for Ecuador, but I certainly do not consider myself wealthy. Why? Because by comparison I know a wealthy class exists here whose wealth is considerably more. If by wealthy we're talking about income, properties, and other assets. With regards to salaries, we also have to keep in mind that Ecuadorians receive a lot of money by remittances and these sums compensate for lower salaries. I have seen numbers indicating there are 2.5 million Ecuadorians living abroad.

I live in a nice and simple house that I rent in Quito. The wealthy, like my friend's parents, own million dollar homes in Cumbayá and some even have houses on the coast as a secondary residence. The wealthy can walk into any store at Quicentro (North) and buy what they want. How many expats have walked into Tiffany & Co and bought something? The wealthy drive Ferrari, Aston Martin, Porsche and other luxury cars.

Maybe there's a need to distinguish between the 1% wealthy and  .1% ultrawealthy? Sounds like your friend is a .1 percenter, if not .05 percenter for Ecuador. I'd say that's another level of exclusivity

In absolute terms, your ultrahigh net worth friend would still be rich if he were suddenly transported to a random location of the US, except maybe high-cost coasts. However, my girlfriend, who is individually an Ecuadorian 10% percenter, as well as her mom and brother, would be dirt poor if suddenly transported to a random location of the US, again in absolute terms. There's a point where a person is simply rich in a global sense, not just locally rich.

Analogy: A dude whose net worth is $4 million is very wealthy to me. Next to another guy worth $600 million, that's peanuts. And next to Jeff Bezos or Warren Buffet, both the previously mentioned rich guys have barely chump change.

In Ecuador I am over the top 1% but well under the .1%. Quite a gap between the two. Even when I was working in the US I only broke into the top 10% one year, the last year I was working in the US. If I went back to the US now I would consider myself to be lower middle class.

lebowski888 wrote:

But of course, Income is only one part of the formula that determines wealth. There's also assets and liabilities (debts).

Absolutely. And as I pointed out in my post, I rent whereas the wealthy own million dollar homes. A quick look at OLX will reveal there are over 150 listings for houses that cost $1 Million or more. That's just on OLX.

Also we have to keep in mind that some wealthy Ecuadorians don't report or under report their income. This is one of the reasons why Ecuador has signed banking agreements with many countries. These agreements will allow foreign countries to reveal account information about Ecuadorians who have more than $ 2 million dollars in foreign accounts.

Then there are the new rich, some of whom have attained their wealth from family land. These people have ordinary jobs with low income but have gained a fortune selling land.

Lebowski: You're quite welcome.  I think the issue is that a large portion of expats move to cities (which are already more wealthy), and then they move to the upper class neighborhoods (because they wouldn't dare live in the middle class "slums".  Living in the countryside, there aren't really "neighborhoods", so when I had a neighbor whose adobe house fell down (that didn't have running water or electricity) I heard about it when she asked if we could help her out because she couldn't possibly afford the $250 to get it connected and wanted electricity to help her rebuild.  Unfortunately, since we live on $250-$300/month, one month of living expenses was more than we could afford just to be neighborly.  I think one of the richer neighbors ended up helping her out.

Vsimple: None of the average ($500$250/month) people I know have relatives overseas sending money back to Ecuador.  I only know two people who do have relatives overseas - one is a lawyer and one owns a car repair garage.  Both are well above average (both certainly in the top 10% maybe even top 1%).  As for the bottom half of the population, I fail to imagine many people who earn less than $500$250/month (much less $120/month) are able to immigrate to the U.S., Canada, or other "rich" countries. Also, to clarify: the 10%, 1% and 0.1% figures I cited include investment income; the bottom 23% and 68% figures are how much money people have available to "live on", not their narrowly defined "income".

Edit: Oops, was doing something else and had 500 on my mind.  Median in Ecuador is closer to $250/month.  Left the strike-through for transparency.

antialiased wrote:

Vsimple: None of the average ($500/month) people I know have relatives overseas sending money back to Ecuador

The fact of the matter is that Ecuadorians abroad send a lot of money to relatives in Ecuador. For 2017, the remittances were nearly $3 billion dollars.

vsimple wrote:

. . . Also we have to keep in mind that some wealthy Ecuadorians don't report or under report their income. This is one of the reasons why Ecuador has signed banking agreements with many countries. These agreements will allow foreign countries to reveal account information about Ecuadorians who have more than $ 2 million dollars in foreign accounts. . . .

Agreed, and it is the same in every country and does probably skew the numbers in the top 0.1% or even top 1%.  However, I doubt many people living on $4 a day are managing their million dollar portfolios in their free time.  Those people account for almost a quarter.  Same thing with those surviving on less than $10 per day (7 out of 10 people here).  So it seems what the problem is that some people are only reporting that that belong to the top 0.1% when they really belong in the top 0.01% or even 0.001%.  However, after you've reached the top 10% in a country, I think you can no longer be called "middle class" by any rational definition.  And certainly not if you're a member of "the 1%".

Additional data found:

Was just looking around and found a study from 2017 showing that for North American and European expats in Cuenca, the average income is $2,346 (for households of one person).

Statistical breakdown was as follows:

Income          Percentage
-----------          ----------------
$800-1k          8%
$1-2k              27%
$2-3k              31%
Over $3k        34%

In other words, all respondents were in the top 10% and 65% in the top 1%.  However, I would take that with a grain of salt.  It seems likely, due to sampling methodology, that people in the bottom 90% would be less likely to have participated in the study.  665 people out of a supposed population of 3-4k participated in the survey.

Study at: http://www.cuenca.gob.ec/?q=system/file … ENCIAL.pdf - Pg. 31

antialiased wrote:

Agreed, and it is the same in every country and does probably skew the numbers in the top 0.1% or even top 1%.  However, I doubt many people living on $4 a day are managing their million dollar portfolios in their free time.  Those people account for almost a quarter.  Same thing with those surviving on less than $10 per day (7 out of 10 people here).  So it seems what the problem is that some people are only reporting that that belong to the top 0.1% when they really belong in the top 0.01% or even 0.001%.  However, after you've reached the top 10% in a country, I think you can no longer be called "middle class" by any rational definition.  And certainly not if you're a member of "the 1%".

I would say skewed is an understatement, at best, and your statistics are probably unreliable considering that Ecuador is a cash society.

Restaurants, convenience stores, hair saloons, mechanics, clothing stores, taxi drivers, landlords, etc mostly deal with cash and don't issue facturas. Out of the 3 landlords that I rented from, only 1 gave me monthly facturas. No factura is basically income not reported. Under-reporting income is not simply limited to small businesses but also extends to other sectors like agriculture.

As for 25% of people earning less than $4, let's see what the average household incomes are in Ecuador.

Looking at a direct source from Ecuador or INEC (instituto nacional de estadísticas y censos). The average household income in Ecuador is as follows:

National Average is $892.90 per month / $10,714 per year
Urban Average is $1,046.3 per month / $12,555 per year
Rural Average is $576.10 per month / $6913 per year

The above statistics reflect a tremendous official report of nearly 40,000 households from all over Ecuador that comprise 153,000 people. IMO, it doesn't get any better than that if people want to know statistically the reality of household incomes in Ecuador. It's a detailed report by the Ecuadorian Government.

Again, the average household income is $10,714 per year. Yes, there are households whose income is less that this, but there are also households with substantially higher incomes.

antialiased wrote:

Income          Percentage
-----------          ----------------
$800-1k          8%
$1-2k              27%
$2-3k              31%
Over $3k        34%

Relative to wealthy Ecuadorians, every income category is middle class there. The first two categories ($800-$2000) are what some taxi drivers who own their own cars earn each month in Quito. (BTW 30k-75k investment)

The $2k-$3k is what managers in stores like Marathon earn. 

Now can one actually claim that taxi drivers are wealthy? Or that a manager at Marathon is wealthy with a salary between $2k-$3k?

As for the $3k+, how much + are we talking about?

vsimple wrote:

I would say skewed is an understatement, at best, and your statistics are probably unreliable considering that Ecuador is a cash society.

And I'd grant that everyone in the top 0.1% is really making 200 times what they report.... They are still the top 0.1%.  That's the way math works.

There are only two ways they aren't in the top 0.1%: One is if they are earning less than they report, which I think you would agree is ridiculous.  The second is if the "poorer" people are cheating more than the "rich", which also seems far fetched.

vsimple wrote:

Restaurants, convenience stores, hair saloons, mechanics, clothing stores, taxi drivers, landlords, etc mostly deal with cash and don't issue facturas. Out of the 3 landlords that I rented from, only 1 gave me monthly facturas. No factura is basically income not reported. Under-reporting income is not simply limited to small businesses but also extends to other sectors like agriculture.

Even assuming that every person cheats the taxman... I fail to see how this counteracts my point that most expats are in the wealthiest 10%.  Unless you are claiming that expats are the most moral people in Ecuador (and thus report their real income while all Ecuadorians lie and cheat) or that the bottom 90% cheat more than the top ten percent.  One would be incredibly racist and both would be rather naive.

vsimple wrote:

As for 25% of people earning less than $4, let's see what the average household incomes are in Ecuador.

Looking at a direct source from Ecuador or INEC (instituto nacional de estadísticas y censos). The average household income in Ecuador is as follows:

National Average is $892.90 per month / $10,714 per year
Urban Average is $1,046.3 per month / $12,555 per year
Rural Average is $576.10 per month / $6913 per year

The above statistics reflect a tremendous official report of nearly 40,000 households from all over Ecuador that comprise 153,000 people. IMO, it doesn't get any better than that if people want to know statistically the reality of household incomes in Ecuador. It's a detailed report by the Ecuadorian Government.

Again, the average household income is $10,714 per year. Yes, there are households whose income is less that this, but there are also households with substantially higher incomes.

I can't believe I have to point this out, but that is household as opposed to individual income.

The average household size is 3.9 (from your source) making the average amount each person lives on in Ecuador $2747/year or $229 per month according to the source you cited.

Second, the sampling methodology was horrible.  They over-sampled urban (wealthier) households.  37% of the population live in rural areas, yet their study only sampled 27% from rural areas.  That would, according to their own report, make people seem wealthier than reality.

So, working backwards and trying to correct for that sampling error (which isn't perfect, but is closer to the truth), you get an average monthly income per household of $812* and per person of $208.

So, no, I wouldn't say "it doesn't get any better than that".  Also, that $208 per month that the average person lives on is lower than what I initially proposed (that the average person lives on $250/month).  I don't think that was your purpose, but thank you for helping me make my point.

*  1046.3*.63 + 567.1*.27

vsimple wrote:

Relative to wealthy Ecuadorians, every income category is middle class there. The first two categories ($800-$2000) are what some taxi drivers who own their own cars earn each month in Quito. (BTW 30k-75k investment)

The $2k-$3k is what managers in stores like Marathon earn. 

Now can one actually claim that taxi drivers are wealthy? Or that a manager at Marathon is wealthy with a salary between $2k-$3k?

As for the $3k+, how much + are we talking about?

Yes, I'd claim that anyone in the top 1% is wealthy.  If you are living on more than ten times what the average Ecuadorian lives on, that sounds pretty wealthy to me.  This whole argument seems like guilt over being wealthy and you not feeling wealthy because you aren't Álvaro Noboa.  Why?  Be happy you have as much money as ten or twenty normal people.  Especially if you earn your money elsewhere or aren't dependent on being white/light-skinned for your cushy income (like most are in Ecuador).

Also interesting: https://worldpolicy.org/2010/06/08/inside-the-bubble/ which discusses the rural/urban and racial disparities in wealth in Ecuador.

antialiased wrote:

I fail to see how this counteracts my point that most expats are in the wealthiest 10%.  Unless you are claiming that expats are the most moral people in Ecuador (and thus report their real income while all Ecuadorians lie and cheat) or that the bottom 90% cheat more than the top ten percent.  One would be incredibly racist and both would be rather naive.

Your claim was that the “vast majority of N.Americans would be considered wealthy.” My point is that is a fallacy because claiming such would be blind to the fact that an Ecuadorian wealthy class exists.

The vast majority of expats according to the Cuenca numbers you posted are in fact middle class.

And as I pointed out, some taxi drivers have similar incomes to 35% of expats that earn between $800-$2000.

Again, are these Ecuadorian taxi drivers deemed wealthy in Ecuador? Or is there an exception for expats?


I also pointed out that managers for stores like Marathon earn between $2k-$3k per month which is similar to 31% percent expat incomes in Cuenca.

Again, are these managers that earn $2k-$3k at stores like Marathon deemed wealthy in Ecuador?

The fact is that a wealthy class of Ecuadorians exists and by comparison the vast majority of N.Americans are middle class.

If it makes some expats happy to claim they are wealthy when in reality they have similar incomes to taxi drivers and store managers who are not deemed wealthy in Ecuador, then ignorance is truly bliss.

antialiased wrote:

Yes, I'd claim that anyone in the top 1% is wealthy.  If you are living on more than ten times what the average Ecuadorian lives on, that sounds pretty wealthy to me.  This whole argument seems like guilt over being wealthy and you not feeling wealthy because you aren't Álvaro Noboa.  Why?  Be happy you have as much money as ten or twenty normal people.  Especially if you earn your money elsewhere or aren't dependent on being white/light-skinned for your cushy income (like most are in Ecuador).

Dude, please lets not get personal. This topic is not about me.

You started an interesting topic, one that I like and engaged in.

Your point is that relative to most Ecuadorians then expats are wealthy.

My point is that expats relative to the wealthy class in Ecuador are middle class.

vsimple wrote:

Again, are these managers that earn $2k-$3k at stores like Marathon deemed wealthy in Ecuador?

Again, if the taxi drivers are in the top 1% of all people in this country then yes, they are wealthy... for the bazillionth time.  If you're in a room of 100 random people and you earn more than anyone else in the room (literal definition of the 1%), then you are wealthy.  Wealth is measured by comparison as are many other attributes.  As they say, "in the land of the blind, the one eyed man is king".

BTW guys, the taxi drivers who earn more than $2000 a month are the ones in the Quito airport cooperativa.

They make 3-4 trips each day at $25 per. Next time anyone visits Quito and takes an airport taxi, tell them that some foreigners think they (taxistas) are wealthy. 

vsimple wrote:

Dude, please lets not get personal. This topic is not about me.

You started an interesting topic, one that I like and engaged in.

Your point is that relative to most Ecuadorians then expats are wealthy.

My point is that expats relative to the wealthy class in Ecuador are middle class.

Fair enough, and I got frustrated and made it personal and I apologize.  It seemed that I'd provided data on end that show N. American expats are generally not "middle class" by any definition I've seen and it started to seem as though there is no evidence that could change your mind.  If there is, I'd be happy to try to find it.

Perhaps this may help.  Here are a couple of definitions of an economic "middle class" (assuming we can agree that the "wealthy" are those above the "middle class"):

Pew Research: Income that falls between 66.6% and 200% the median income.

Brookings Institution: Everyone but the poorest 20% and the wealthiest 20%

I'd consider another definition, but from all the definitions I could find (that weren't country specific or based on something other than economics - e.g. Marxist power dynamics/etc.), none included the top 10% much less top 1%.  Or maybe we're talking past each other some other way...

vsimple wrote:

BTW guys, the taxi drivers who earn more than $2000 a month are the ones in the Quito airport cooperativa.

They make 3-4 trips each day at $25 per. Next time anyone visits Quito and takes an airport taxi, tell them that some foreigners think they (taxistas) are wealthy. 

Not sure if you know, but income for any business (which would include owner-operator taxis) is revenues - expenses.  So first you would need to subtract gas and vehicle maintenance then the cost of any licensing/memberships and/or loans.  Since I don't live in Quito, I can't speak to those costs.  However, if they have revenues of $100/day, they don't have incomes anywhere near $100/day.

antialiased wrote:

vsimple wrote:

BTW guys, the taxi drivers who earn more than $2000 a month are the ones in the Quito airport cooperativa.

They make 3-4 trips each day at $25 per. Next time anyone visits Quito and takes an airport taxi, tell them that some foreigners think they (taxistas) are wealthy. 

Not sure if you know, but income for any business (which would include owner-operator taxis) is revenues - expenses.  So first you would need to subtract gas and vehicle maintenance then the cost of any licensing/memberships and/or loans.  Since I don't live in Quito, I can't speak to those costs.  However, if they have revenues of $100/day, they don't have incomes anywhere near $100/day.

I know all to well about expenses. Some, owners have taxis as investments and rent the taxi to the cooperativa for $2000 a month similar to NNN.

vsimple wrote:

antialiased wrote:

vsimple wrote:

BTW guys, the taxi drivers who earn more than $2000 a month are the ones in the Quito airport cooperativa.

They make 3-4 trips each day at $25 per. Next time anyone visits Quito and takes an airport taxi, tell them that some foreigners think they (taxistas) are wealthy. 

Not sure if you know, but income for any business (which would include owner-operator taxis) is revenues - expenses.  So first you would need to subtract gas and vehicle maintenance then the cost of any licensing/memberships and/or loans.  Since I don't live in Quito, I can't speak to those costs.  However, if they have revenues of $100/day, they don't have incomes anywhere near $100/day.

I know all to well about expenses. Some, owners have taxis as investments and rent the taxi to the cooperativa for $2000 a month similar to NNN.

Ok, wasn't trying to impute your knowledge.  Merely the example you chose for a "wealthy" taxi driver was one with revenues of only $100/day of which I'd assume maybe $20 is income (excluding them from the top 10% much less top 1%).

antialiased wrote:

vsimple wrote:

antialiased wrote:

Not sure if you know, but income for any business (which would include owner-operator taxis) is revenues - expenses.  So first you would need to subtract gas and vehicle maintenance then the cost of any licensing/memberships and/or loans.  Since I don't live in Quito, I can't speak to those costs.  However, if they have revenues of $100/day, they don't have incomes anywhere near $100/day.

I know all to well about expenses. Some, owners have taxis as investments and rent the taxi to the cooperativa for $2000 a month similar to NNN.

Ok, wasn't trying to impute your knowledge.  Merely the example you chose for a "wealthy" taxi driver was one with revenues of only $100/day of which I'd assume maybe $20 is income (excluding them from the top 10% much less top 1%).

Nice try with your assumption, I'll just re-post what I posted.

Relative to wealthy Ecuadorians, every income category is middle class there. The first two categories ($800-$2000) are what some taxi drivers who own their own cars earn each month in Quito. (BTW 30k-75k investment)

Vsimple: Ok, so since you haven't answered my question yet, I'll ask again: Is there any evidence that would convince you or is it simply a matter of feelings/faith?  Because if it's faith/feelings as opposed to logic, I should stop trying to convince you and we can both move on.

Also, can you define "wealthy"?

antialiased wrote:

Vsimple: Ok, so since you haven't answered my question yet, I'll ask again: Is there any evidence that would convince you or is it simply a matter of feelings/faith?  Because if it's faith/feelings as opposed to logic, I should stop trying to convince you and we can both move on.

Also, can you define "wealthy"?

Your question is weird.

You know my point: A wealthy class of Ecuadorians exists and by comparison the vast majority of expats incomes are middle class.

vsimple wrote:

Your question is weird.

You know my point: A wealthy class of Ecuadorians exists and by comparison the vast majority of expats incomes are middle class.

Ok, I understand.  The middle class is whatever you say it is and the wealthy class are whatever you say they are and you can't or don't want to specifically define either group.

In other words, it's all your feelings, and so there's no point discussing it.

antialiased wrote:

vsimple wrote:

Your question is weird.

You know my point: A wealthy class of Ecuadorians exists and by comparison the vast majority of expats incomes are middle class.

Ok, I understand.  The middle class is whatever you say it is and the wealthy class are whatever you say they are and you can't or don't want to specifically define either group.

In other words, it's all your feelings, and so there's no point discussing it.

You strike me as enjoying to have the last say, so have at it. You won't be the first nor the last expat who is oblivious to an Ecuadorian wealthy class. One day, come visit affluent areas in Quito with million dollar houses and perhaps you'll understand my point.

I'm not oblivious to the wealthy class.  You're in it. I'm not. Have a good evening.