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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 deposit (finance), bank deposits, bond (finance), bonds, and participations in companies' share capital. Financial assets are usually more market liq ...
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 English is a West Germanic languages, West Germanic language first spoken in History of Anglo-Saxon England, early medieval England, which has eventu ...
word , which is from an
Indo-European The Indo-European languages are a language family native to western and southern Eurasia. It comprises most of the languages of Europe together with those of the northern Indian subcontinent and the Iranian Plateau. Some European languages of t ...
word stem. The modern concept of wealth is of significance in all areas of
economics Economics () is a social science Social science is the Branches of science, branch of science devoted to the study of society, societies and the Social relation, relationships among individuals within those societies. The term was fo ...

economics
, and clearly so for
growth economics
growth economics
and
development economics Development economics is a branch of economics Economics () is a social science Social science is the Branches of science, branch of science devoted to the study of society, societies and the Social relation, relationships among i ...
, 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 "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 PiragesDennis Clark Pirages (born July 30, 1942; Died October 1, 2020) is an American political scientist, environmentalist Image:Voynet Montreuil 2008-01-06.jpg, Dominique Voynet, 2008 An environmentalist is a person who is concerned with and/or advocat ...
, 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 or desirable or permissible and others as bad or undesirable or impermissible. A norm Nor ...
process with various
ethical Ethics or moral philosophy is a branch of philosophy that "involves systematizing, defending, and recommending concepts of right and wrong action (philosophy), behavior".''Internet Encyclopedia of Philosophy'"Ethics"/ref> The field of ethics, al ...
implications, since often wealth maximization is seen as a goal or is thought to be a normative principle of its own. Robert L. Heilbroner, 1987
2008 2008 was designated as: *International Year of LanguagesThe United Nations General Assembly proclaimed 2008 as the International Year of Languages, pursuant to a resolution of UNESCO The United Nations Educational, Scientific and Cultura ...
. ''
The New Palgrave: A Dictionary of Economics ''The New Palgrave Dictionary of Economics'' (2018), 3rd ed., is an twenty-volume reference work on economics published by Palgrave Macmillan. It contains around 3,000 entries, including many classic essays from the original Inglis Palgrave Dictiona ...
'', v. 4, pp. 880–83. Brief previe
link
A
community A community is a social unit (a group of living things) with commonality such as Norm (social), norms, religion, values, Convention (norm), customs, or Identity (social science), identity. Communities may share a sense of place (geography), plac ...

community
, 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 that aims to maintain international peace and international security, security, develop friendly relations among nations, achieve international cooperation, and be a centre for har ...

United Nations
definition of ''
inclusive wealthInclusive wealth is the aggregate value of all capital assets in a given region, including human capital Human capital is the stock of habits, knowledge Knowledge is a familiarity, awareness, or understanding of someone or something, such ...
'' 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 Earth is the third planet from the Sun and the only astronomical object known to harbour and support life. 29.2% of Ear ...
, 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 ( 1723 – 17 July 1790) was a Scottish economist, philosopher as well as a moral philosopher Ethics or moral philosophy is a branch of philosophy that "involves systematizing, defending, and recommending concepts of right and ...

Adam Smith
, 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 's ''The Creation of Adam'' (c. 1512), part of the Sistine Chapel ceiling The ...

The Wealth of Nations
'', described wealth as "the annual produce of the land and labor of the society". This "produce" is, at its simplest, that which satisfies human needs and wants of
utility As a topic of economics Economics () is a social science Social science is the Branches of science, branch of science devoted to the study of society, societies and the Social relation, relationships among individuals within thos ...

utility
. In popular usage, wealth can be described as an abundance of items of economic
value Value or values may refer to: * Value (ethics) it may be described as treating actions themselves as abstract objects, putting value to them ** Values (Western philosophy) expands the notion of value beyond that of ethics, but limited to Western s ...
, or the state of controlling or possessing such items, usually in the form of
money In a 1786 James Gillray caricature, the plentiful money bags handed to King George III are contrasted with the beggar whose legs and arms were amputated, in the left corner">174x174px Money is any item or verifiable record that is generally a ...

money
,
real estate Real estate is property consisting of land and the buildings on it, along with its natural resource , Malaysia Malaysia ( ; ) is a country in Southeast Asia. The federation, federal constitutional monarchy consists of States and feder ...

real estate
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 , alter, , , , , , , , or ...
. 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 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 c ...
refers to the value of
assets In financial accounting Financial accounting is the field of accounting Accounting or Accountancy is the measurement, processing, and communication of financial and non financial information about economic entity, economic entities such as ...
owned minus the value of
liabilities Liability may refer to: Law * Legal liability, in both civil and criminal law ** Public liability, part of the law of tort which focuses on civil wrongs ** Product liability, the area of law in which manufacturers, distributors, suppliers, re ...
owed at a point in time. Wealth can be categorized into three principal categories:
personal property Personal property is 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 ri ...
, including homes or automobiles; monetary savings, such as the accumulation of past
income In microeconomics, income is the Consumption (economics), consumption and saving opportunity gained by an entity within a specified timeframe, which is generally expressed in monetary terms.Smith's financial dictionary. Smith, Howard Irving. 190 ...
; and the
capital Capital most commonly refers to: * Capital letter Letter case (or just case) is the distinction between the letters that are in larger uppercase or capitals (or more formally ''majuscule'') and smaller lowercase (or more formally ''minusc ...
wealth of income producing assets, including
real estate Real estate is property consisting of land and the buildings on it, along with its natural resource , Malaysia Malaysia ( ; ) is a country in Southeast Asia. The federation, federal constitutional monarchy consists of States and feder ...

real estate
,
stock In finance, stock (also capital stock) consists of all of the shares In financial markets A financial market is a market in which people trade financial securities and derivatives at low transaction costs. Some of the securities in ...

stock
s, bonds, and
business Business is the activity of making one's living or making money by producing or buying and selling products (such as goods and services). Simply put, it is "any activity or enterprise entered into for profit." Having a business name A trad ...

business
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 status, socioeconomic factors like wealth, income, Race (human categorization), race, education, ethnicity, gender, Job, occupation, social ...
. 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. 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 little material possessions or income Income is the consumption and saving opportunity gained by an entity within a specified timeframe, which is generally expressed in monetary terms.Smith's financial dictionary ...

poverty
. The term implies a
social contract In moral A moral (from Latin Latin (, or , ) is a classical language belonging to the Italic languages, Italic branch of the Indo-European languages. Latin was originally spoken in the area around Rome, known as Latium. Through the power ...
on establishing and maintaining
ownership Ownership is the state or fact of exclusive right In Anglo-Saxon law Anglo-Saxon law (Old English Old English (, ), or Anglo-Saxon, is the earliest recorded form of the English language English is a West Germanic languages, West Germ ...
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 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 c ...
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 450px, Example of Older Classifications by the IMF and the United Nations, UN from 2008 A developing country is a country with a less developed industrial base and a low Human Development Index (HDI) relative to other countries. However, ...
. Concepts of wealth also vary across time. Modern labor-saving inventions and the development of the
sciences Science () is a systematic enterprise that Scientific method, builds and organizes knowledge in the form of Testability, testable explanations and predictions about the universe."... modern science is a discovery as well as an invention. ...

sciences
have vastly improved the standard of living 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.
Industrialization Factories, refineries, mines, and agribusiness are all elements of industrialisation Industrialisation ( alternatively spelled industrialization) is the period of social and economic change that transforms a human group from an agrarian societ ...
emphasized the role of technology. Many jobs were automated. Machines replaced some workers while other workers became more specialized. Labour specialization became critical to economic success. However,
physical capital Physical capital represents in economics Economics () is the social science that studies how people interact with value; in particular, the Production (economics), production, distribution (economics), distribution, and Consumption (economi ...
, as it came to be known, consisting of both the
natural capital on "natural capital" and "balancing the budget of our resources" File:Fires along the Rio Xingu, Brazil - NASA Earth Observatory.jpg, Fires along the Rio Xingu, Brazil - NASA Earth Observatory. Loss of natural capital assets may have significant ...
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 assets ...
, became the focus of the ''analysis of wealth''.
Adam Smith Adam Smith ( 1723 – 17 July 1790) was a Scottish economist, philosopher as well as a moral philosopher Ethics or moral philosophy is a branch of philosophy that "involves systematizing, defending, and recommending concepts of right and ...

Adam Smith
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 economist, one of the most influential of the classical economists along with Thomas Malthus Thomas Robert Malthus (; 13/14 February 1766 – 23 December 1834) w ...

David Ricardo
,
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 Enlightenment thinkers and commonly known as the "Father of Liberalism Liberalism is a ...

John Locke
,
John Stuart Mill John Stuart Mill (20 May 1806 – 7 May 1873), also cited as J. S. Mill, was an English philosopher A philosopher is someone who practices philosophy Philosophy (from , ) is the study of general and fundamental questions, such as ...
, in the 18th century and 19th century built on these views of wealth that we now call
classical economics Classical economics or classical political economy is a school of thought in economics that flourished, primarily in Kingdom of Great Britain, Britain, in the late 18th and early-to-mid 19th century. Its main thinkers are held to be Adam Smith, Je ...
.
Marxian economics Marxian economics, or the Marxian school of economics, is a school of political economic thought. Its foundations can be traced back to . However, unlike , Marxian economists tend to accept the concept of as a reasonable object of inquiry in i ...
(''see
labor theory of value The labor theory of value (LTV) is a theory of value that argues that the economic value In economics Economics () is the social science that studies how people interact with value; in particular, the Production (economics), produc ...
'') 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 pu ...

Grundrisse
'' 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 little material possessions or income Income is the consumption and saving opportunity gained by an entity within a specified timeframe, which is generally expressed in monetary terms.Smith's financial dictionary ...

poverty
.


Wealth creation

Billionaire A billionaire is a person with a net worth of at least 1,000,000,000, one billion (1,000,000,000, i.e., a thousand million) units of a given currency, usually of a major currency such as the United States dollar, euro, or pound sterling. The Am ...

Billionaire
s such as
Bill Gates William Henry Gates III (born October 28, 1955) is an American business magnate A business magnate is someone who has achieved great success and enormous wealth through the ownership of multiple lines of enterprise. The term characterist ...
,
Jeff Bezos Jeffrey Preston Bezos ( ; né Jorgensen; born January 12, 1964) is an American entrepreneur, media proprietor A media proprietor, media mogul or media tycoon refers to a successful entrepreneur or businessperson who controls, through person ...

Jeff Bezos
,
Warren Buffett Warren Edward Buffett ( ; born August 30, 1930) is an American business magnate, investor, and philanthropist. He is currently the chairman and CEO of Berkshire Hathaway Berkshire Hathaway () is an American Multinational corporation, multi ...
,
Elon Musk Elon Reeve Musk (; born June 28, 1971) is an entrepreneur and . He is the founder, CEO and Chief Engineer at ; early-stage investor, CEO and Product Architect of ; founder of ; and co-founder of and . With an estimated net worth of around ...

Elon Musk
,
Charlie Munger Charles Thomas Munger (born January 1, 1924) is an American billionaire investor, businessman, former real estate attorney, architectural designer, and philanthropist. He is vice chairman of Berkshire Hathaway Berkshire Hathaway () is an Ame ...

Charlie Munger
and others advise the following principles of wealth creation: #
Science Science () is a systematic enterprise that builds and organizes knowledge Knowledge is a familiarity, awareness, or understanding of someone or something, such as facts ( descriptive knowledge), skills (procedural knowledge), or objects ...

Science
and
scientific method The scientific method is an empirical Empirical evidence for a proposition is evidence, i.e. what supports or counters this proposition, that is constituted by or accessible to sense experience or experimental procedure. Empirical evidence ...

scientific method
#
Economics Economics () is a social science Social science is the Branches of science, branch of science devoted to the study of society, societies and the Social relation, relationships among individuals within those societies. The term was fo ...

Economics
and continuous lifelong
learning Learning is the process of acquiring new , , s, s, , attitudes, and s. The ability to learn is possessed by s, s, and some ; there is also evidence for some kind of learning in certain s. Some learning is immediate, induced by a single event (e ...

learning
#
Reading Reading is the process of taking in the sense or meaning of letters, symbols, ''etc.'', especially by sight or touch. For educators and researchers, reading is a multifaceted process involving such areas as word recognition, orthography (spelli ...
and
education Education is the process of facilitating , or the acquisition of , s, , morals, s, s, and personal development. Educational methods include , , , and directed . Education frequently takes place under the guidance of educators; however, lea ...

education
#Learning from rich people
billionaire A billionaire is a person with a net worth of at least 1,000,000,000, one billion (1,000,000,000, i.e., a thousand million) units of a given currency, usually of a major currency such as the United States dollar, euro, or pound sterling. The Am ...

billionaire
s and
millionaire A millionaire is an individual whose net worth Net worth is the value of all the non-financial and financial asset In financial accountancy, financial accounting, an asset is any resource owned or controlled by a business or an economic e ...
s.


Amount of wealth in the world

The wealth of households amounts to US$280
trillion A trillion is a number with two distinct definitions: * 1,000,000,000,000, i.e. one million million, or (ten to the twelfth power Power typically refers to: * Power (physics) In physics, power is the amount of energy transferred or converted ...
(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 September 1973) is an English economist An economist is a practitioner in the social sciences, social science discipline of economics. The individual may also study, develop, and apply theories and concepts f ...
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.


Wealthiest cities

World's 15 richest cities in 2017.


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

In
economics Economics () is a social science Social science is the Branches of science, branch of science devoted to the study of society, societies and the Social relation, relationships among individuals within those societies. The term was fo ...

economics
, wealth (in a commonly applied
accounting Accounting or Accountancy is the measurement ' Measurement is the number, numerical quantification (science), quantification of the variable and attribute (research), attributes of an object or event, which can be used to compare with other ob ...
sense, sometimes savings) is the
net worth Net worth is the value of all the non-financial and financial 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 c ...
of a person, household, or nation – that is, the value of all
asset In financial accounting Financial accounting is the field of accounting Accounting or Accountancy is the measurement, processing, and communication of financial and non financial information about economic entity, economic entities such a ...
s owned net of all
liabilities Liability may refer to: Law * Legal liability, in both civil and criminal law ** Public liability, part of the law of tort which focuses on civil wrongs ** Product liability, the area of law in which manufacturers, distributors, suppliers, re ...
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 technique Technique or techniques may refer to: Music * The Techniques, a Jamaican rocksteady vocal group of the 1960s *Technique ...
, 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 little material possessions or income Income is the consumption and saving opportunity gained by an entity within a specified timeframe, which is generally expressed in monetary terms.Smith's financial dictionary ...

poverty
. Analytical emphasis may be on its determinants or
distributionDistribution may refer to: Mathematics *Distribution (mathematics) Distributions, also known as Schwartz distributions or generalized functions, are objects that generalize the classical notion of functions in mathematical analysis. Distr ...
. Economic terminology distinguishes between wealth and income. Wealth or savings is a ''
stock In finance, stock (also capital stock) consists of all of the shares In financial markets A financial market is a market in which people trade financial securities and derivatives at low transaction costs. Some of the securities i ...
'' 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 In microeconomics, income is the Consumption (economics), consumption and saving opportunity gained by an entity within a specified timeframe, which is generally expressed in monetary terms.Smith's financial dictionary. Smith, Howard Irving. 190 ...
from that wealth, as measurable ''over'' say a year is a ''
flow Flow may refer to: Science and technology * Flow (fluid) or fluid dynamics, the motion of a gas or liquid * Flow (geomorphology), a type of mass wasting or slope movement in geomorphology * Flow (mathematics), a group action of the real numbers on ...
'' 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 Economics () is the social science that studies how people interact with value; in particular, the Production (economics), producti ...
theory the '
wealth effectThe wealth effect is the change in spending that accompanies a change in perceived wealth Wealth is the abundance (economics), abundance of Value (economics), valuable financial assets or property, physical possessions which can be converted int ...
' may refer to the increase in aggregate consumption from an increase in national wealth. 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 Microeconomics (from Greek prefix ''mikro-'' meaning "small" + ''economics'') is a branch of economics that studies the behavior of individuals and Theor ...
, which is the percentage change in the amount of
consumption Consumption may refer to: *Resource consumption *Tuberculosis, an infectious disease, historically in biology: * Consumption (ecology), receipt of energy by consuming other organisms in social sciences: * Consumption (economics), the purchasing of ...
goods demanded for each one-percent change in wealth. 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 is the solid surface of Earth that is not permanently submerged in water. Most but not all land is situated at elevations above sea level (variable over geologic time frames) and consists mainly of Earth's crust, crustal components such a ...
and
capital Capital most commonly refers to: * Capital letter Letter case (or just case) is the distinction between the letters that are in larger uppercase or capitals (or more formally ''majuscule'') and smaller lowercase (or more formally ''minusc ...
) and ''financial'' (money, bonds, etc.). Measurable wealth typically excludes intangible or nonmarketable assets such as
human capital Human capital is a concept used by human resource professionals to designate personal attributes considered useful in the production process. It encompasses employee knowledge Knowledge is a familiarity or awareness, of someone or someth ...

human capital
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 group In the social sciences, a social ...
. In economics, 'wealth' corresponds to the
accounting Accounting or Accountancy is the measurement ' Measurement is the number, numerical quantification (science), quantification of the variable and attribute (research), attributes of an object or event, which can be used to compare with other ob ...
term '
net worth Net worth is the value of all the non-financial and financial 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 c ...
', 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 technique Technique or techniques may refer to: Music * The Techniques, a Jamaican rocksteady vocal group of the 1960s *Technique ...
). 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 pay ...
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 Maslow's hierarchy of needs is an idea in psychology Psychology is the science of mind and ...
systems to include the
present value In economics Economics () is a social science Social science is the Branches of science, branch of science devoted to the study of society, societies and the Social relation, relationships among individuals within those societies. ...
projected future outlays considered to be liabilities. Macroeconomic questions include whether the issuance of government bonds affects
investment Investment is the dedication 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 Finance is the study of financial institution ...
and
consumption Consumption may refer to: *Resource consumption *Tuberculosis, an infectious disease, historically in biology: * Consumption (ecology), receipt of energy by consuming other organisms in social sciences: * Consumption (economics), the purchasing of ...
through the
wealth effectThe wealth effect is the change in spending that accompanies a change in perceived wealth Wealth is the abundance (economics), abundance of Value (economics), valuable financial assets or property, physical possessions which can be converted int ...
. 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 Accounting or Accountancy is the measurement, processing, and communication of financial and non financial information about economic entity, economic entities such as businesses and corporations. Accoun ...
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 set of concepts in the social sciences Social science is the Branches of science, branch of science devoted to the study of society, societies and the Social relation, relationships among individuals within those soc ...
is not identical to wealth, but the two concepts are related (particularly in
Marxist theory Marxist philosophy or Marxist theory are works in philosophy Philosophy (from , ) is the study of general and fundamental questions, such as those about existence Existence is the ability of an entity to interact with physical reality ...
), 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 Personal property is 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 ri ...
and
financial assets A financial asset is a non-physical 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 positiv ...
. In both Marxist and Weberian theory, class is divided into upper, middle, and
lower Lower may refer to: *Lower (surname)Lower is a surname. Notable people with the surname include: * Arthur R. M. Lower (1889–1988) Canadian historian * Britt Lower (born 1985), American actress * Cyrus B. Lower (1843–1924), American Civil War ...
, 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 stratu ...
). 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 Academic publishing is the subfield of publishing Publishing is the activity of making information, literature, music, software and other content available to the public for sale or for free. Tradit ...
, 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 Latin (, or , ) is a classical language A classical language is a language A language is a structured system of communication Communication (from Latin ''communicare'', meaning "to share" or "to be ...

pension
s and home ownership. 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 colorCo ...
and
poor Poverty is the state of not having enough material possessions or income Income is the consumption and saving opportunity gained by an entity within a specified timeframe, which is generally expressed in monetary terms.Smith's financial dictio ...

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
human capital Human capital is a concept used by human resource professionals to designate personal attributes considered useful in the production process. It encompasses employee knowledge Knowledge is a familiarity or awareness, of someone or someth ...

human capital
, has been estimated at $125 Orders of magnitude (numbers)#1012, trillion (US$125×1012) in year 2000. Including human capital, the United Nations estimated it in 2008 to be $118 trillion in the United States alone. According to the Kuznet's Hypothesis, 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" 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. According to Richard H Ropers, the wealth inequality in the United States, 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 Orders of magnitude (numbers)#1012, trillion was estimated to be stored in tax havens worldwide.


See also

* Gross National Happiness * Happiness economics * Productivity improving technologies (historical) * Quality of life * Working time * List of wealthiest historical figures


References

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