Among the critics at the Sunday night family dinner table, the issue that weighed most heavily with my brother was what was revealed by Sotomayor's financial disclosure statements. Her finances are rather remarkable for their sparseness. Apparently, she has no stocks, no bonds, no mutual funds, in fact no financial holdings other than a simple savings and checking account at Citibank. (In a way, that's rather smart for a judge, as it avoids any conflict of interest questions.) What's more, her entire savings (the combined checking and savings accounts) was between $50,000 and $115,000 in 2007, and as low as $30,000 in the previous four years. My brother was shocked and appalled that someone who makes $179,500 a year should have so little saved three decades into her career. She may be very bright in some subjects, he conceded, but in the practical matter of personal finance, she is colossally stupid. Top economist Greg Mankiw expressed a similar doubt. However, many have pounced on this.
Economist Brad DeLong estimates the value of her Greenwich Village condo to be about $1 million, and the value of her pension to be about $2.5 million. As far as I can tell, the condo estimate is speculation based on the general neighborhood where she lives, since her exact address and details of her home financing are not part of the public disclosures (although there appears to have been a reference to a home equity loan for improvements a few years ago, at least substantiating that she owns rather than rents). As a federal judge, she can continue working or retire at age 65 as she likes, and either way she draws full salary for the rest of her life.
Statistician Nate Silver crunches the numbers, and figures that her salary affords a very nice but by no means extravagant life for someone living in Manhattan. He notes the high tax rates (including a 3.86% city tax on top of state and fed) and figures $65,000 of her salary goes to taxes. He estimates another $65,000 goes to housing (based on average neighborhood rents for a 2-bedroom apartment in a doorman-building in Greenwich Village, $5400/month). That leaves $50,000 a year for utilities, transportation, food, and everything else. As Silver notes, in Manhattan, that would let you eat out nicely, attend a dozen Yankee games, and take a one-week vacation, and not a whole lot more.
Silver also takes Mankiw to task for missing the basic economics of the situation. He notes there are only four basic economic incentives to save money. First is to protect against a drop in income, like losing your job. Sotomayor's paycheck is from the US Government and short of an impeachable offense, she has job security for life, so that incentive is irrelevant. Second is to save for retirement, but as noted above, she has a guaranteed full salary for life, so that doesn't apply either. Third is to save for your spouse and children, but she is single. Fourth is to save for an expensive purchase, like a home (which she already has) or a nice car (which a Manhattanite doesn't need). Based on rational economics, there's really no incentive for Sotomayor to be saving her money rather than spending it.
Further, as USD law prof (and conservative blogger) Tom Smith has noted, someone in her position "any day she wants to she could walk out of her current job and into a partnership at a law firm in Manhattan or DC and get paid (guessing again) maybe $2 million a year, with the potential for a lot more… She has a guaranteed job for life with very generous retirement and health benefits, and any day she decides she wants to be a millionaire, all she has to do is pick up the phone. She's doing a job she must love and be good at or she wouldn't be where she is..."
Based on the evidence, I'd agree that she is working in a job she loves, has plenty enough money to live the life she wants, and has as close to zero worries about financial security as anyone could possibly have. That doesn't sound very stupid to me. I'd say she's one wise Latina.
UPDATE 6/5/09: In a document submitted to the Senate Judiciary Committee, as reported by the Washington Post: "Sotomayor listed a net worth of $740,000, consisting primarily of equity in a $1 million condo in New York's Greenwich Village. She reported having $32,000 in cash and bank accounts, and personal property worth $108,000. Sotomayor reported that she owned no stocks, bonds, mutual funds or other non-real-estate investments."