How do you count millionaires?

Episode Summary

Executive Summary: This episode of More or Less examines three statistics-driven controversies: claims that 9,500 UK millionaires will leave because of Labour taxes, the real cost and meaning of asylum support, and whether the Baumol effect explains rising public-service costs. It also adjudicates a wager over the likely impact of VAT on private school fees, highlighting how assumptions and sample bias can drive big headline claims.

Main Topics: Millionaires leaving the UK: The programme scrutinizes the estimate that 9,500 millionaires will leave the UK in 2024, questioning the representativeness of the sample and the leap from observed movement to a national forecast, especially when headlines attribute it to Labour tax policy before the research predated the election. Asylum seeker support and costs: The episode revisits a prior fact-check about asylum seekers versus pensioners, clarifying that while asylum seekers receive low cash payments, the state also bears accommodation and administration costs. It explores whether those non-cash supports should be viewed as a form of benefit. Baumol effect and public sector spending: Using the metaphor of a string quartet, the programme explains Baumol’s cost disease: labour-intensive public services like health, education, and social care become more expensive because productivity rises faster in other sectors and wages must still compete. NHS productivity and short-term fiscal pressure: An IFS economist argues Baumol helps explain long-run public spending trends, but not the NHS’s recent problems. The episode points instead to post-pandemic productivity shortfalls, weak investment, and inflation-driven wage pressures. Bet on private school VAT effects: Two policy wonks debate an Adam Smith Institute estimate that VAT on private school fees could cost the taxpayer £2.5 billion. The disagreement centers on how many pupils will leave private schools and how much parents’ labor supply would change. How statistics shape political narratives: Across all items, the programme emphasizes that large, attention-grabbing numbers often depend on hidden definitions, modeling choices, and sample limitations, which can substantially alter the meaning of the underlying claim.

Key Arguments: The 9,500 millionaire-outflow figure is based on a sample of around 8,000 UK high-net-worth individuals tracked via LinkedIn and business portals, but that sample is skewed toward very wealthy people and may not represent all millionaires. A large sample is not automatically representative; extrapolating from unrepresentative data can produce misleading national claims, as illustrated by historical polling failures. The millionaire report was published before Labour took office, so linking the forecast directly to Labour tax policy is speculative. Asylum seekers do receive low cash support, but the larger public cost comes from accommodation, processing, and administration, especially expensive hotel contracts. Whether free accommodation counts as a ‘benefit’ depends on definition: it is support that prevents destitution, but many asylum seekers would prefer the right to work instead. The Baumol effect explains why labour-intensive services become more expensive over time when productivity gains are limited, because wages have to rise with the wider economy. For the NHS, current cost and productivity issues are not mainly Baumol-driven; post-pandemic inefficiencies and underinvestment are more immediate explanations. The private-school VAT debate depends heavily on pupil-response assumptions; the estimated fiscal cost changes dramatically if 0%, 5%, 7%, 10%, or 25% of pupils leave. The underlying disagreement in the VAT bet is less about the tax itself than about how elastic demand for private education really is. Public policy headlines can overstate certainty when they rest on modelled scenarios or samples with strong selection bias rather than direct observation.

Data Points: Millionaires estimated in UK: 602,000 - Andrew Amoyles’ estimate of UK residents meeting the report’s US-dollar-millionaire definition Millionaires expected to leave in 2024: 9,500 - Headline figure from the Wealth Migration Report Millionaires already left by June: 4,000 - Basis for extrapolating the full-year 9,500 estimate UK high-net-worth sample tracked: about 8,000 - Size of the UK sample in New World Wealth’s database Global high-net-worth database: about 150,000 - Database used to track movements of wealthy individuals Millionaire wealth definition: US dollar millionaires; about three quarters of a million pounds - Definition used for international comparison Asylum system total cost: just under £4 billion - Estimated cost for financial year 2022-2023, including accommodation, processing, detention, and returns Asylum cost per person per year: just under £21,000 - Home Office estimate for people still in the asylum system Asylum cost per person per year in 2018-19: just under £8,000 - Earlier estimate showing how costs have risen over time Hotel accommodation cost: £120-£150 per person per night - Typical cost of housing asylum seekers in hotels Normal housing cost for asylum seekers (2018-19): less than £20 per person per night - Earlier accommodation estimate before hotel use increased Public service productivity growth (1997-2019): 0.2% per year - IFS comparison used in the Baumol discussion Private sector productivity growth (1997-2019): 0.8% per year - Comparator used to illustrate uneven productivity growth NHS acute care productivity: around 10% lower than pre-pandemic levels - Recent NHS research cited to show current productivity problems Private school pupil exit estimate range (IFS): 3%-7% - Reference estimate discussed in the VAT bet Private school pupil exit estimate (Adam Smith Institute/Maxwell Marlow’s view): 10% - Personal best guess stated by Maxwell Marlow Top survey estimate of pupils leaving private schools: 25% - Estimate from an Independent Schools Council-funded parent survey Potential taxpayer cost from VAT on private school fees: as much as £2.5 billion - Adam Smith Institute claim being debated Bet stakes: £100 to the winner’s charity; with tiered payouts up to £500 - Agreed terms for the wager between Maxwell Marlow and Sam Friedman

Pivotal Quotes: "The sheer number of people doesn't make it representative." — Tim Harford: Challenge to the idea that an 8,000-person sample automatically supports a national millionaire-outflow claim "I think it is a benefit in the sense that they would otherwise be destitute and would have nowhere to live." — Madeleine Sumption: Explaining why asylum accommodation can reasonably be described as support or a benefit "The Baumol effect is broadly something positive and something to be celebrated, because it's really about a story of economic progress being spread more widely through the economy." — Ben Zaranko: Summarizing the long-run interpretation of rising costs in labour-intensive public services

Implications: Listeners should be skeptical of dramatic policy headlines built on weak sampling or model assumptions. The episode shows that definitions, baselines, and behavioral assumptions can radically change conclusions about migration, asylum, education, and public spending.