Are You Rich?

A married couple — a law professor and a doctor — live in Chicago and make more than $250,000 per year. They have three kids. Are they rich?

In a blog post last week, the professor said he and his wife are "just getting by despite seeming to be rich. We aren't." He says they pay nearly $100,000 a year in taxes, and he lists the family's other expenses. (Update: The original post has been taken down; here's a cached version.)

The post — part of a broader discussion of the tax-cut debate — provoked a bunch of high-profile responses over the past few days from Paul Krugman, Tyler Cowen, and Brad DeLong, among others.

For the moment, I'd like to set aside the tax-cut debate and pose a not-as-simple-as-it-seems question: What does it mean to be rich?

It's easy enough to think of some amount of money in the bank that would qualify a family as rich. But the law professor's post frames the issue in a different way — in terms of annual income, rather than net worth.

That's a measure familiar to everybody who tries to balance a household budget. So let's stick with that.

Planet Money Question of the Day: What annual income makes a family rich? Hit the comments.

Bonus Income: Data-driven types can check out table on p. 33 of this report that shows the distribution of income among U.S. households.

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