![Total wealth per capita, 1, OWID](https://upload.wikimedia.org/wikipedia/commons/a/a6/Total_wealth_per_capita%2C_1%2C_OWID.svg)
Wealth is the abundance of
valuable financial asset
A financial asset is a non-physical asset whose value is derived from a contractual claim, such as bank deposits, bonds, and participations in companies' share capital. Financial assets are usually more liquid than other tangible assets, such as ...
s or
physical possessions which can be converted into a form that can be used for
transactions. This includes the core meaning as held in the originating
Old English
Old English (, ), or Anglo-Saxon, is the earliest recorded form of the English language, spoken in England and southern and eastern Scotland in the early Middle Ages. It was brought to Great Britain by Anglo-Saxon settlement of Britain, Anglo ...
word , which is from an
Indo-European
The Indo-European languages are a language family native to the overwhelming majority of Europe, the Iranian plateau, and the northern Indian subcontinent. Some European languages of this family, English, French, Portuguese, Russian, Dutch ...
word stem. The modern concept of wealth is of significance in all areas of
economics
Economics () is the social science that studies the Production (economics), production, distribution (economics), distribution, and Consumption (economics), consumption of goods and services.
Economics focuses on the behaviour and intera ...
, and clearly so for
growth economics
Economic growth can be defined as the increase or improvement in the inflation-adjusted market value of the goods and services produced by an economy in a financial year. Statisticians conventionally measure such growth as the percent rate of ...
and
development economics
Development economics is a branch of economics which deals with economic aspects of the development process in low- and middle- income countries. Its focus is not only on methods of promoting economic development, economic growth and structural ...
, yet the meaning of wealth is context-dependent. An individual possessing a substantial net worth is known as ''wealthy''. Net worth is defined as the current value of one's assets less liabilities (excluding the principal in trust accounts).
At the most general level, economists may define wealth as "the total of anything of value" that captures both the subjective nature of the idea and the idea that it is not a fixed or static concept. Various definitions and concepts of wealth have been asserted by various individuals and in different contexts.
[Denis "Authentic Development: Is it Sustainable?", pp. 189–205 in ''Building Sustainable Societies'', ]Dennis Pirages Dennis Clark Pirages (born July 30, 1942; Died October 1, 2020) is an American political scientist, environmentalist and former Harrison Professor of International Environmental Politics at the University of Maryland, College Park, known for his wor ...
, ed., M.E. Sharpe, . (1996) Defining wealth can be a
normative
Normative generally means relating to an evaluative standard. Normativity is the phenomenon in human societies of designating some actions or outcomes as good, desirable, or permissible, and others as bad, undesirable, or impermissible. A norm in ...
process with various
ethical
Ethics or moral philosophy is a branch of philosophy that "involves systematizing, defending, and recommending concepts of right and wrong behavior".''Internet Encyclopedia of Philosophy'' The field of ethics, along with aesthetics, concerns ma ...
implications, since often wealth maximization is seen as a goal or is thought to be a normative principle of its own.
Robert L. Heilbroner
Robert L. Heilbroner (March 24, 1919 – January 4, 2005) was an American economist and historian of economic thought. The author of some 20 books, Heilbroner was best known for ''The Worldly Philosophers: The Lives, Times and Ideas of the Great ...
, 1987 2008
File:2008 Events Collage.png, From left, clockwise: Lehman Brothers went bankrupt following the Subprime mortgage crisis; Cyclone Nargis killed more than 138,000 in Myanmar; A scene from the opening ceremony of the 2008 Summer Olympics in Beijing; ...
. '' The New Palgrave: A Dictionary of Economics'', v. 4, pp. 880–883. Brief previe
link
. A
community
A community is a social unit (a group of living things) with commonality such as place, norms, religion, values, customs, or identity. Communities may share a sense of place situated in a given geographical area (e.g. a country, village, tow ...
, region or country that possesses an abundance of such possessions or resources to the benefit of the common good is known as wealthy.
The
United Nations
The United Nations (UN) is an intergovernmental organization whose stated purposes are to maintain international peace and international security, security, develop friendly relations among nations, achieve international cooperation, and be ...
definition of ''
inclusive wealth
Inclusive wealth is the aggregate value of all capital assets in a given region, including human capital, social capital, public capital, and natural capital. Maximizing inclusive wealth is often a goal of sustainable development. The Inclusive ...
'' is a monetary measure which includes the sum of natural, human, and physical assets.
Natural capital includes land, forests,
energy resources
World energy resources are the estimated maximum capacity for energy production given all available resources on Earth. They can be divided by type into fossil fuel, nuclear fuel and renewable resources.
Fossil fuel
Remaining reserves of f ...
, and minerals. Human capital is the population's education and skills. Physical (or "manufactured") capital includes such things as machinery, buildings, and infrastructure.
History
Adam Smith
Adam Smith (baptized 1723 – 17 July 1790) was a Scottish economist and philosopher who was a pioneer in the thinking of political economy and key figure during the Scottish Enlightenment. Seen by some as "The Father of Economics"——— ...
, in his seminal work ''
The Wealth of Nations
''An Inquiry into the Nature and Causes of the Wealth of Nations'', generally referred to by its shortened title ''The Wealth of Nations'', is the ''magnum opus'' of the Scottish economist and moral philosopher Adam Smith. First published in 1 ...
'', described wealth as "the annual produce of the land and labor of the society". This "produce" is, at its simplest, a good or service which satisfies human needs, and wants of
utility
As a topic of economics, utility is used to model worth or value. Its usage has evolved significantly over time. The term was introduced initially as a measure of pleasure or happiness as part of the theory of utilitarianism by moral philosopher ...
.
In popular usage, wealth can be described as an abundance of items of economic
value
Value or values may refer to:
Ethics and social
* Value (ethics) wherein said concept may be construed as treating actions themselves as abstract objects, associating value to them
** Values (Western philosophy) expands the notion of value beyo ...
, or the state of controlling or possessing such items, usually in the form of
money
Money is any item or verifiable record that is generally accepted as payment for goods and services and repayment of debts, such as taxes, in a particular country or socio-economic context. The primary functions which distinguish money are as ...
,
real estate
Real estate is property consisting of land and the buildings on it, along with its natural resources such as crops, minerals or water; immovable property of this nature; an interest vested in this (also) an item of real property, (more general ...
and personal
property
Property is a system of rights that gives people legal control of valuable things, and also refers to the valuable things themselves. Depending on the nature of the property, an owner of property may have the right to consume, alter, share, r ...
. An individual who is considered wealthy, affluent, or rich is someone who has accumulated substantial wealth relative to others in their society or reference group.
In economics,
net worth
Net worth is the value of all the non-financial and financial assets owned by an individual or institution minus the value of all its outstanding liabilities. Since financial assets minus outstanding liabilities equal net financial assets, net ...
refers to the value of
assets
In financial accountancy, financial accounting, an asset is any resource owned or controlled by a business or an economic entity. It is anything (tangible or intangible) that can be used to produce positive economic value. Assets represent value ...
owned minus the value of
liabilities owed at a point in time. Wealth can be categorized into three principal categories:
personal property
property is property that is movable. In common law systems, personal property may also be called chattels or personalty. In civil law systems, personal property is often called movable property or movables—any property that can be moved fr ...
, including homes or automobiles; monetary savings, such as the accumulation of past
income
Income is the consumption and saving opportunity gained by an entity within a specified timeframe, which is generally expressed in monetary terms. Income is difficult to define conceptually and the definition may be different across fields. For ...
; and the
capital
Capital may refer to:
Common uses
* Capital city, a municipality of primary status
** List of national capital cities
* Capital letter, an upper-case letter Economics and social sciences
* Capital (economics), the durable produced goods used f ...
wealth of income producing assets, including
real estate
Real estate is property consisting of land and the buildings on it, along with its natural resources such as crops, minerals or water; immovable property of this nature; an interest vested in this (also) an item of real property, (more general ...
,
stock
In finance, stock (also capital stock) consists of all the shares by which ownership of a corporation or company is divided.Longman Business English Dictionary: "stock - ''especially AmE'' one of the shares into which ownership of a company ...
s,
bonds, and
business
Business is the practice of making one's living or making money by producing or Trade, buying and selling Product (business), products (such as goods and Service (economics), services). It is also "any activity or enterprise entered into for pr ...
es. All these delineations make wealth an especially important part of
social stratification
Social stratification refers to a society's categorization of its people into groups based on socioeconomic factors like wealth, income, race, education, ethnicity, gender, occupation, social status, or derived power (social and political). As ...
. Wealth provides a type of individual safety net of protection against an unforeseen decline in one's living standard in the event of job loss or other emergency and can be transformed into home ownership, business ownership, or even a college education by expending the wealth to complete a purchase of such.
Wealth has been defined as a collection of things limited in supply, transferable, and useful in satisfying human desires.
Scarcity is a fundamental factor for wealth. When a desirable or valuable commodity (transferable good or skill) is abundantly available to everyone, the owner of the commodity will possess no potential for wealth. When a valuable or desirable commodity is in scarce supply, the owner of the commodity will possess great potential for wealth.
'Wealth' refers to some ''accumulation'' of resources (net asset value), whether abundant or not. 'Richness' refers to an ''abundance'' of such resources (income or flow). A wealthy individual, community, or nation thus has more accumulated resources (capital) than a poor one. The opposite of wealth is destitution. The opposite of richness is
poverty
Poverty is the state of having few material possessions or little income. Poverty can have diverse social, economic, and political causes and effects. When evaluating poverty in ...
.
The term implies a
social contract
In moral and political philosophy
Political philosophy or political theory is the philosophical study of government, addressing questions about the nature, scope, and legitimacy of public agents and institutions and the relationships betw ...
on establishing and maintaining
ownership
Ownership is the state or fact of legal possession and control over property, which may be any asset, tangible or intangible. Ownership can involve multiple rights, collectively referred to as title, which may be separated and held by different ...
in relation to such items which can be invoked with little or no effort and expense on the part of the owner. The concept of wealth is relative and not only varies between societies, but varies between different sections or regions in the same society. A personal
net worth
Net worth is the value of all the non-financial and financial assets owned by an individual or institution minus the value of all its outstanding liabilities. Since financial assets minus outstanding liabilities equal net financial assets, net ...
of US$10,000 in most parts of the United States would certainly not place a person among the wealthiest citizens of that locale. However, such an amount would constitute an extraordinary amount of wealth in impoverished
developing countries
A developing country is a sovereign state with a lesser developed industrial base and a lower Human Development Index (HDI) relative to other countries. However, this definition is not universally agreed upon. There is also no clear agreem ...
.
Concepts of wealth also vary across time. Modern labor-saving inventions and the development of the
sciences
Science is a systematic endeavor that builds and organizes knowledge in the form of testable explanations and predictions about the universe.
Science may be as old as the human species, and some of the earliest archeological evidence for ...
have vastly improved the
standard of living
Standard of living is the level of income, comforts and services available, generally applied to a society or location, rather than to an individual. Standard of living is relevant because it is considered to contribute to an individual's quality ...
in modern societies for even the poorest of people. This comparative wealth across time is also applicable to the future; given this trend of human advancement, it is possible that the standard of living that the wealthiest enjoy today will be considered impoverished by
future generations
Future generations are cohorts of hypothetical people not yet born. Future generations are contrasted with current and past generations, and evoked in order to encourage thinking about intergenerational equity. The moral patienthood of future ge ...
.
Industrialization
Industrialisation ( alternatively spelled industrialization) is the period of social and economic change that transforms a human group from an agrarian society into an industrial society. This involves an extensive re-organisation of an econo ...
emphasized the role of technology. Many jobs were automated. Machines replaced some workers while other workers became more specialized.
Labour specialization
The division of labour is the separation of the tasks in any economic system or organisation so that participants may specialise (specialisation). Individuals, organizations, and nations are endowed with, or acquire specialised capabilities, and ...
became critical to economic success. However,
physical capital
Physical capital represents in economics one of the three primary factors of production. Physical capital is the apparatus used to produce a good and services. Physical capital represents the tangible man-made goods that help and support the produc ...
, as it came to be known, consisting of both the
natural capital
Natural capital is the world's stock of natural resources, which includes geology, soils, air, water and all living organisms. Some natural capital assets provide people with free goods and services, often called ecosystem services. All of t ...
and the
infrastructural capital
Public capital is the aggregate body of government-owned assets that are used as a means for productivity.Aschauer, D. A. (1990). Why is infrastructure important? Conference Series roceedings Federal Reserve Bank of Boston. Pp. 21-68. Such asset ...
, became the focus of the ''analysis of wealth''.
Adam Smith
Adam Smith (baptized 1723 – 17 July 1790) was a Scottish economist and philosopher who was a pioneer in the thinking of political economy and key figure during the Scottish Enlightenment. Seen by some as "The Father of Economics"——— ...
saw wealth creation as the combination of materials, labour, land, and technology in such a way as to capture a profit (excess above the cost of production).
[Smith, Adam. ]
An Inquiry into the Nature and Causes of the Wealth of Nations
'' The theories of
David Ricardo
David Ricardo (18 April 1772 – 11 September 1823) was a British Political economy, political economist. He was one of the most influential of the Classical economics, classical economists along with Thomas Robert Malthus, Thomas Malthus, Ad ...
,
John Locke
John Locke (; 29 August 1632 – 28 October 1704) was an English philosopher and physician, widely regarded as one of the most influential of Age of Enlightenment, Enlightenment thinkers and commonly known as the "father of liberalism ...
,
John Stuart Mill
John Stuart Mill (20 May 1806 – 7 May 1873) was an English philosopher, political economist, Member of Parliament (MP) and civil servant. One of the most influential thinkers in the history of classical liberalism, he contributed widely to ...
, in the 18th century and 19th century built on these views of wealth that we now call
classical economics
Classical economics, classical political economy, or Smithian economics is a school of thought in political economy that flourished, primarily in Britain, in the late 18th and early-to-mid 19th century. Its main thinkers are held to be Adam Smith ...
.
Marxian economics
Marxian economics, or the Marxian school of economics, is a Heterodox economics, heterodox school of political economic thought. Its foundations can be traced back to Karl Marx, Karl Marx's Critique of political economy#Marx's critique of politic ...
(''see
labor theory of value
The labor theory of value (LTV) is a theory of value that argues that the economic value of a good or service is determined by the total amount of " socially necessary labor" required to produce it.
The LTV is usually associated with Marxian e ...
'') distinguishes in the ''
Grundrisse
The ''Grundrisse der Kritik der Politischen Ökonomie'' (''Foundations of a Critique of Political Economy'') is an unfinished manuscript by the German philosopher Karl Marx. The series of seven notebooks was rough-drafted by Marx, chiefly for ...
'' between material wealth and human wealth, defining human wealth as "wealth in human relations"; land and labour were the source of all material wealth. The German cultural historian Silvio Vietta links wealth/poverty to rationality. Having a leading position in the development of rational sciences, in new technologies and in economic production leads to wealth, while the opposite can be correlated with
poverty
Poverty is the state of having few material possessions or little income. Poverty can have diverse social, economic, and political causes and effects. When evaluating poverty in ...
.
Amount of wealth in the world
![Worlds regions by total wealth(in trillions USD), 2018](https://upload.wikimedia.org/wikipedia/commons/1/1f/Worlds_regions_by_total_wealth%28in_trillions_USD%29%2C_2018.jpg)
The wealth of households worldwide amounts to US$280
trillion
''Trillion'' is a number with two distinct definitions:
* 1,000,000,000,000, i.e. one million million, or (ten to the twelfth power), as defined on the short scale. This is now the meaning in both American and British English.
* 1,000,000,000,0 ...
(2017). According to the eighth edition of the Global Wealth Report, in the year to mid-2017, total global wealth rose at a rate of 6.4%, the fastest pace since 2012 and reached US$280 trillion, a gain of US$16.7 trillion. This reflected widespread gains in equity markets matched by similar rises in non-financial assets, which moved above the pre-crisis year 2007's level for the first time this year. Wealth growth also outpaced population growth, so that global mean wealth per adult grew by 4.9% and reached a new record high of US$56,540 per adult.
Tim Harford
Timothy Douglas Harford (born 27 September 1973) is an English economic journalist who lives in Oxford.
Harford is the author of four economics books and writes his long-running ''Financial Times'' column, "The Undercover Economist", syndic ...
has asserted that a small child has greater wealth than the 2 billion poorest people in the world combined, since a small child has no debt.
According to the 2021 global wealth report by
McKinsey & Company
McKinsey & Company is a global management consulting firm founded in 1926 by University of Chicago professor James O. McKinsey, that offers professional services to corporations, governments, and other organizations. McKinsey is the oldest and ...
, the worldwide total net worth is currently at US$514 trillion in 2020, with China being the wealthiest nation with net worth of US$120 trillion. However, another report by
Credit Suisse
Credit Suisse Group AG is a global investment bank and financial services firm founded and based in Switzerland. Headquartered in Zürich, it maintains offices in all major financial centers around the world and is one of the nine global " ...
in 2021 found that the total wealth of the US still exceeded that of China, with the US having US$126.3 trillion and China having US$74.9 trillion.
Philosophical analysis
In Western civilization, wealth is connected with a quantitative type of thought, invented in the ancient Greek "revolution of rationality", involving for instance the quantitative analysis of nature, the rationalization of warfare, and measurement in economics.
The invention of coined money and banking was particularly important. Aristotle describes the basic function of money as a universal instrument of quantitative measurement"for it measures all things
..making things alike and comparable due to a social "agreement" of acceptance. In that way, money also enables a new type of economic society and the definition of wealth in measurable quantities, such as gold and money. Modern philosophers like Nietzsche criticized the fixation on measurable wealth: "Unsere ‘Reichen' – das sind die Ärmsten! Der eigentliche Zweck alles Reichtums ist vergessen!" ("Our 'rich people' – those are the poorest! The real purpose of all wealth has been forgotten!")
Economic analysis of wealth accumulation
In
economics
Economics () is the social science that studies the Production (economics), production, distribution (economics), distribution, and Consumption (economics), consumption of goods and services.
Economics focuses on the behaviour and intera ...
, wealth (in a commonly applied
accounting
Accounting, also known as accountancy, is the measurement, processing, and communication of financial and non financial information about economic entities such as businesses and corporations. Accounting, which has been called the "languag ...
sense, sometimes savings) is the
net worth
Net worth is the value of all the non-financial and financial assets owned by an individual or institution minus the value of all its outstanding liabilities. Since financial assets minus outstanding liabilities equal net financial assets, net ...
of a person, household, or
nation
A nation is a community of people formed on the basis of a combination of shared features such as language, history, ethnicity, culture and/or society. A nation is thus the collective identity of a group of people understood as defined by those ...
– that is, the value of all
asset
In financial accountancy, financial accounting, an asset is any resource owned or controlled by a business or an economic entity. It is anything (tangible or intangible) that can be used to produce positive economic value. Assets represent value ...
s owned net of all
liabilities owed at a point in time. For national wealth as measured in the
national accounts
National accounts or national account systems (NAS) are the implementation of complete and consistent accounting techniques for measuring the economic activity of a nation. These include detailed underlying measures that rely on double-entry ...
, the net liabilities are those owed to the rest of the world. The term may also be used more broadly as referring to the productive capacity of a society or as a contrast to
poverty
Poverty is the state of having few material possessions or little income. Poverty can have diverse social, economic, and political causes and effects. When evaluating poverty in ...
. Analytical emphasis may be on its determinants or
distribution Distribution may refer to:
Mathematics
*Distribution (mathematics), generalized functions used to formulate solutions of partial differential equations
* Probability distribution, the probability of a particular value or value range of a vari ...
.
Economic terminology distinguishes between wealth and income. Wealth or savings is a ''
stock
In finance, stock (also capital stock) consists of all the shares by which ownership of a corporation or company is divided.Longman Business English Dictionary: "stock - ''especially AmE'' one of the shares into which ownership of a company ...
'' variable – that is, it is measurable ''at a date'' in time, for example the value of an orchard on December 31 minus debt owed on the orchard. For a given amount of wealth, say at the beginning of the year,
income
Income is the consumption and saving opportunity gained by an entity within a specified timeframe, which is generally expressed in monetary terms. Income is difficult to define conceptually and the definition may be different across fields. For ...
from that wealth, as measurable ''over'' say a year is a ''
flow'' variable. What marks the income as a flow is its measurement per unit of time, such as the value of apples yielded from the orchard per year.
In
macroeconomic
Macroeconomics (from the Greek prefix ''makro-'' meaning "large" + ''economics'') is a branch of economics dealing with performance, structure, behavior, and decision-making of an economy as a whole.
For example, using interest rates, taxes, and ...
theory the '
wealth effect The wealth effect is the change in spending that accompanies a change in perceived wealth.
Usually the wealth effect is positive: spending changes in the same direction as perceived wealth.
Effect on individuals
Changes in a consumer's wealth cause ...
' may refer to the increase in aggregate consumption from an increase in
national wealth
National net wealth, also known as national net worth, is the total sum of the value of a country's assets minus its liabilities. It refers to the total value of net wealth possessed by the residents of a state at a set point in time. This fig ...
. One feature of its effect on economic behavior is the
wealth elasticity of demand
{{Original research, date=January 2013
The wealth elasticity of demand, in microeconomics and macroeconomics, is the proportional change in the consumption of a good (economics), good relative to a change in consumers' Wealth (economics), wealth (a ...
, which is the percentage change in the amount of
consumption
Consumption may refer to:
*Resource consumption
*Tuberculosis, an infectious disease, historically
* Consumption (ecology), receipt of energy by consuming other organisms
* Consumption (economics), the purchasing of newly produced goods for curren ...
goods demanded for each one-percent change in wealth.
There are several historical developmental economics points of view on the basis of wealth, such as from ''
Principles of Political Economy
''Principles of Political Economy'' (1848) by John Stuart Mill was one of the most important economics or political economy textbooks of the mid-nineteenth century. It was revised until its seventh edition in 1871, shortly before Mill's death ...
'' by
John Stuart Mill
John Stuart Mill (20 May 1806 – 7 May 1873) was an English philosopher, political economist, Member of Parliament (MP) and civil servant. One of the most influential thinkers in the history of classical liberalism, he contributed widely to ...
, ''
The Wealth of Nations
''An Inquiry into the Nature and Causes of the Wealth of Nations'', generally referred to by its shortened title ''The Wealth of Nations'', is the ''magnum opus'' of the Scottish economist and moral philosopher Adam Smith. First published in 1 ...
'' by
Adam Smith
Adam Smith (baptized 1723 – 17 July 1790) was a Scottish economist and philosopher who was a pioneer in the thinking of political economy and key figure during the Scottish Enlightenment. Seen by some as "The Father of Economics"——— ...
,
''Capital'' by
Karl Marx
Karl Heinrich Marx (; 5 May 1818 – 14 March 1883) was a German philosopher, economist, historian, sociologist, political theorist, journalist, critic of political economy, and socialist revolutionary. His best-known titles are the 1848 ...
, etc. Over the history, some of the key underlying factors in wealth creation and the measurement of the wealth include the scalable innovation and application of human knowledge in the form of institutional structure and political/ideological "superstructure", the scarce resources (both natural and man-made), and the saving of monetary assets.
Wealth may be measured in
nominal or real values – that is, in money value as of a given date or adjusted to net out price changes. The assets include those that are tangible (
land
Land, also known as dry land, ground, or earth, is the solid terrestrial surface of the planet Earth that is not submerged by the ocean or other bodies of water. It makes up 29% of Earth's surface and includes the continents and various islan ...
and
capital
Capital may refer to:
Common uses
* Capital city, a municipality of primary status
** List of national capital cities
* Capital letter, an upper-case letter Economics and social sciences
* Capital (economics), the durable produced goods used f ...
) and ''financial'' (money, bonds, etc.). Measurable wealth typically excludes intangible or nonmarketable assets such as
human capital
Human capital is a concept used by social scientists to designate personal attributes considered useful in the production process. It encompasses employee knowledge, skills, know-how, good health, and education. Human capital has a substantial ...
and
social capital
Social capital is "the networks of relationships among people who live and work in a particular society, enabling that society to function effectively". It involves the effective functioning of social groups through interpersonal relationships ...
. In economics, 'wealth' corresponds to the accounting term '
net worth
Net worth is the value of all the non-financial and financial assets owned by an individual or institution minus the value of all its outstanding liabilities. Since financial assets minus outstanding liabilities equal net financial assets, net ...
', but is measured differently. Accounting measures net worth in terms of the historical cost of assets while economics measures wealth in terms of current values. But analysis may adapt typical accounting conventions for economic purposes in social accounting (such as in
national accounts
National accounts or national account systems (NAS) are the implementation of complete and consistent accounting techniques for measuring the economic activity of a nation. These include detailed underlying measures that rely on double-entry ...
). An example of the latter is
generational accounting
Generational accounting is a method of measuring the fiscal burdens facing current and future generations. Generational accounting considers how much each adult generation, on a per person basis, is likely to pay in future taxes net of transfer p ...
of
social security
Welfare, or commonly social welfare, is a type of government support intended to ensure that members of a society can meet basic human needs such as food and shelter. Social security may either be synonymous with welfare, or refer specificall ...
systems to include the
present value
In economics and finance, present value (PV), also known as present discounted value, is the value of an expected income stream determined as of the date of valuation. The present value is usually less than the future value because money has inte ...
projected future outlays considered to be liabilities. Macroeconomic questions include whether the issuance of government bonds affects
investment
Investment is the dedication of money to purchase of an asset to attain an increase in value over a period of time. Investment requires a sacrifice of some present asset, such as time, money, or effort.
In finance, the purpose of investing i ...
and
consumption
Consumption may refer to:
*Resource consumption
*Tuberculosis, an infectious disease, historically
* Consumption (ecology), receipt of energy by consuming other organisms
* Consumption (economics), the purchasing of newly produced goods for curren ...
through the
wealth effect The wealth effect is the change in spending that accompanies a change in perceived wealth.
Usually the wealth effect is positive: spending changes in the same direction as perceived wealth.
Effect on individuals
Changes in a consumer's wealth cause ...
.
Environmental assets are not usually counted in measuring wealth, in part due to the difficulty of valuation for a
non-market good. Environmental or
green accounting
Green accounting is a type of accounting that attempts to factor environmental costs into the financial results of operations. It has been argued that gross domestic product ignores the environment and therefore policymakers need a revised model th ...
is a method of
social accounting Social accounting (also known as ''social accounting and auditing'', ''social accountability'', ''social and environmental accounting'', ''corporate social reporting'', ''corporate social responsibility reporting'', ''non-financial reporting'' or '' ...
for formulating and deriving such measures on the argument that an educated valuation is superior to a value of zero (as the implied valuation of environmental assets).
Sociological treatments
Wealth and social class
Social class
A social class is a grouping of people into a set of Dominance hierarchy, hierarchical social categories, the most common being the Upper class, upper, Middle class, middle and Working class, lower classes. Membership in a social class can for ...
is not identical to wealth, but the two concepts are related (particularly in
Marxist theory
Marxist philosophy or Marxist theory are works in philosophy that are strongly influenced by Karl Marx's materialist approach to theory, or works written by Marxists. Marxist philosophy may be broadly divided into Western Marxism, which drew fro ...
),
leading to the concept of
socioeconomic status
Socioeconomic status (SES) is an economic and sociological combined total measure of a person's work experience and of an individual's or family's economic access to resources and social position in relation to others. When analyzing a family's ...
. Wealth at the individual or household level refers to value of everything a person or family owns, including
personal property
property is property that is movable. In common law systems, personal property may also be called chattels or personalty. In civil law systems, personal property is often called movable property or movables—any property that can be moved fr ...
and
financial asset
A financial asset is a non-physical asset whose value is derived from a contractual claim, such as bank deposits, bonds, and participations in companies' share capital. Financial assets are usually more liquid than other tangible assets, such as ...
s.
In both Marxist and Weberian theory, class is divided into
upper,
middle, and
lower
Lower may refer to:
*Lower (surname)
*Lower Township, New Jersey
*Lower Receiver (firearms)
*Lower Wick
Lower Wick is a small hamlet located in the county of Gloucestershire, England. It is situated about five miles south west of Dursley, eight ...
, with each further subdivided (e.g.,
upper middle class
In sociology, the upper middle class is the social group constituted by higher status members of the middle class. This is in contrast to the term ''lower middle class'', which is used for the group at the opposite end of the middle-class strat ...
).
The upper class are schooled to maintain their wealth and pass it to future generations.
[Sherraden, Michael. ''Assets and the Poor: A New American Welfare Policy''. Armonk: ]M. E. Sharpe
M. E. Sharpe, Inc., an academic publisher, was founded by Myron Sharpe in 1958 with the original purpose of publishing translations from Russian in the social sciences and humanities. These translations were published in a series of journals, the ...
, Inc., 1991.
The middle class views wealth as something for emergencies and it is seen as more of a cushion. This class comprises people that were raised with families that typically owned their own home, planned ahead and stressed the importance of education and achievement. They earn a significant amount of income and also have significant amounts of consumption. However, there is limited savings (deferred consumption) or investments, besides retirement
pension
A pension (, from Latin ''pensiō'', "payment") is a fund into which a sum of money is added during an employee's employment years and from which payments are drawn to support the person's retirement from work in the form of periodic payments ...
s and home ownership.
![US Wealth Inequality - v2](https://upload.wikimedia.org/wikipedia/commons/e/ea/US_Wealth_Inequality_-_v2.png)
Below the middle class, the
working class
The working class (or labouring class) comprises those engaged in manual-labour occupations or industrial work, who are remunerated via waged or salaried contracts. Working-class occupations (see also " Designation of workers by collar colou ...
and
poor have the least amount of wealth, with circumstances discouraging accumulation of assets.
Distribution
Although precise data are not available, the total
household wealth in the world, excluding the value of
human capital
Human capital is a concept used by social scientists to designate personal attributes considered useful in the production process. It encompasses employee knowledge, skills, know-how, good health, and education. Human capital has a substantial ...
, has been estimated at $418.3
trillion
''Trillion'' is a number with two distinct definitions:
* 1,000,000,000,000, i.e. one million million, or (ten to the twelfth power), as defined on the short scale. This is now the meaning in both American and British English.
* 1,000,000,000,0 ...
(US$418.3×10
12) at the end of the year 2020.
For 2018, the World Bank estimated the value of the world's produced capital, natural capital, and human capital to be $1,152 trillion. According to the
Kuznets curve
The Kuznets curve () expresses a hypothesis advanced by economist Simon Kuznets in the 1950s and 1960s. According to this hypothesis, as an economy develops, market forces first increase and then decrease economic inequality.
The Kuznets curve ...
, inequality of wealth and income increases during the early phases of economic development, stabilizes and then becomes more equitable.
, about 90% of global wealth is distributed in North America, Europe, and "rich
Asia-Pacific
Asia-Pacific (APAC) is the part of the world near the western Pacific Ocean. The Asia-Pacific region varies in area depending on context, but it generally includes East Asia, Russian Far East, South Asia, Southeast Asia, Australia and Pacific Isla ...
" countries, and in 2008, 1% of adults were estimated to hold 40% of world wealth, a number which falls to 32% when adjusted for
purchasing power parity
Purchasing power parity (PPP) is the measurement of prices in different countries that uses the prices of specific goods to compare the absolute purchasing power of the countries' currency, currencies. PPP is effectively the ratio of the price of ...
. According to Richard H Ropers, the
concentration of wealth in the United States is "inequitably distributed".
In 2013, 1% of adults were estimated to hold 46% of world wealth and around $18.5
trillion
''Trillion'' is a number with two distinct definitions:
* 1,000,000,000,000, i.e. one million million, or (ten to the twelfth power), as defined on the short scale. This is now the meaning in both American and British English.
* 1,000,000,000,0 ...
was estimated to be stored in
tax haven
A tax is a compulsory financial charge or some other type of levy imposed on a taxpayer (an individual or legal entity) by a governmental organization in order to fund government spending and various public expenditures (regional, local, or n ...
s worldwide.
See also
*
Gross National Happiness
Gross National Happiness (GNH), sometimes called Gross Domestic Happiness (GDH), is a philosophy that guides the government of Bhutan. It includes an index which is used to measure the collective happiness and well-being of a population. Gross Nat ...
*
Happiness economics
The economics of happiness or happiness economics is the theoretical, qualitative and quantitative study of happiness and quality of life, including positive and negative affects, well-being, life satisfaction and related concepts – typically t ...
*
Productivity improving technologies (historical) The productivity-improving technologies are the technological innovations that have historically increased productivity.
Productivity is often measured as the ratio of (aggregate) output to (aggregate) input in the production of goods and services. ...
*
Quality of life
Quality of life (QOL) is defined by the World Health Organization as "an individual's perception of their position in life in the context of the culture and value systems in which they live and in relation to their goals, expectations, standards ...
*
Working time
Working(laboring) time is the period of time that a person spends at paid labor. Unpaid labor such as personal housework or caring for children or pets is not considered part of the working week.
Many countries regulate the work week by law, s ...
*
List of wealthiest historical figures
Many historical individuals have been described as one of "the wealthiest" ever. This list presents individuals prior to the beginning of contemporary history (which began after World War II) and gathers published estimates of their ( inflation-a ...
References
Further reading
*
*
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