There are few more inflammatory topics than the issue of what people earn. Yet there are profound misunderstandings, misguided envy and ignorance at the heart of this personal yet economically vital issue.
For the vast majority of people, the concept of earnings means an annual salary. But this is not how most wealth is accumulated by individuals. That happens through capital gains, or asset appreciation. Very few become seriously rich via salary: first, in many countries it is taxed relatively highly (at a marginal rate of almost 50 per cent in Britain, including payroll tax), and, second, because most of us find it hard to save money from our monthly pay.
Part of the issue is semantics. Even expert commentators mix up the words income, wages, salary and earnings. Perhaps to all intents and purposes they have interchangeable meanings now. But in many respects they are not the measure that matters – whether for motivation, economic impact, or knowing who actually amasses fortunes.