distribution of wealth: Information and Much More from Answers.com
- ️Wed Jul 01 2015
World Distribution of Household Wealth in the Year 2000 (PPP)
Distribution of wealth is a comparison of the wealth of various members or groups in a society, and is one aspect of the economy and social structure. Typically, various racial and ethnic groups possess differing amounts of wealth, and the same is true when people are grouped by age or education. Different jobs bring in greatly different wages; the pay for some jobs is thousands of times greater than the pay for other jobs.
The phrase "distribution of wealth" should not be confused with the phrase "redistribution of wealth". The statistical study of the distribution of wealth is designed to provide data, not recommend policy.
Definition of Wealth
The word "wealth" is often confused with "income". These are two different terms describing two different but related things. Wealth is the items of economic value that an individual owns. Income is an inflow of items of economic value. The reason wealth needs to be differentiated from income is because an individual also has expenses, which is an outflow of items of economic value. The relation between wealth, income, and expenses is as follows:
change of wealth = income - expenses
It can also be expressed as:
wealth = assets - liabilities
A common mistake made by people embarking on a research project to determine the distribution of wealth is to use statistical data of income to describe the distribution of wealth. The distribution of income is substantially different from the distribution of wealth. According to the International Association for Research in Income and Wealth (I.A.R.I.W.), "It is found that the world distribution of wealth is much more unequal than that of income." [1]
An individual can have the highest income in the world, but can also have the highest expenses in the world and it is thus possible that his wealth is, and remains, small. This is why it is important to distinguish between "wealth" and "income".
Statistical distributions
There are any number of ways in which the distribution of wealth can be analysed. One example is to compare the wealth of the richest ten percent with the wealth of the poorest ten percent. In many societies, the richest ten percent control more than half of the total wealth. Mathematically, a Pareto distribution has often been used to quantify the distribution of wealth, since it models an unequal distribution. More sophisticated models have also been proposed[2]. All indicators belonging to income inequality metrics also can be used as wealth inequality metrics.
Redistribution of wealth and public policy
The political systems of socialism and communism are intended to diminish the conflicts arising from the unequal distribution of wealth. The idea is that a government, serving the interests of the proletariat, would confiscate the wealth of the rich and then distribute benefits to the poor. Critics of state-managed economies, notably Milton Friedman, point out that the slogan "From each according to his ability, to each according to his need." turns ability into a liability and need into an asset. They cite the former Soviet Union and The People's Republic of China as examples of countries where, despite aggressive economic regulation, wealth continues to be distributed unevenly.
In many societies, more moderate attempts are made through property redistribution, taxation or regulation to redistribute capital and diminish extreme inequalities of wealth. Examples of this practice go back at least to the Roman republic in the third century B.C.,[3] when laws were passed limiting the amount of wealth or land that could be owned by any one family. Motivations for such limitations on wealth include the desire for equality of opportunity, a fear that great wealth leads to political corruption, to gain the political favor of a voting bloc, or fear that extreme concentration of wealth results rebellion[4] or at least in a limited consumer base.
Wealth creation and its effects
Proponents of capitalism or Objectivist philosophy reject most redistributions in favor of wealth creation and abolishment of trade barriers. Wealth can be created through several means, such as harvesting and selling natural resources, improving production methods to allow faster creation of wealth, or applying skill and labor to increase the value of materials.
The creation of wealth affects economic growth that can boost demand and trade, create jobs and increase wages. However, since wealth often trickles down unevenly, the standard of living may improve while simultaneously increasing wealth inequality. Thus wealth distribution must be considered alongside such factors as job opportunities, the costs of goods and services, and the base standard of living.
Charity
In addition to government efforts to redistribute wealth, the tradition of individual charity (such as tithing) is a voluntary means of wealth transference. There are also many voluntary charitable organizations making concerted efforts to aid those in need.
21st century
At the end of the twentieth century, wealth is concentrated among the G8 and Western industrialized nations, along with several Asian nations.
A study by the World Institute for Development Economics Research at United Nations University reports that the richest 1% of adults alone owned 40% of global assets in the year 2000, and that the richest 10% of adults accounted for 85% of the world total. The bottom half of the world adult population owned barely 1% of global wealth. Extensive statistics, many indicating the growing world disparity, are included in the available report, press releases, Excel tables and Powerpoint slides. [5] Moreover, another study found that the richest 2% own more than half of global household assets.[6] Despite this, the distribution has been changing quite rapidly in the direction of greater concentration of wealth.[7]
Real estate
In particular, it can be argued that the large increases in property values of recent years has had the effect of redistributing the wealth from those without property to those with property. The property value increases were due to lending mortgages to poor people who could not repay.
The impact is more profound on people at lower income levels who are more likely to rent their home rather than own it outright. The poor are generally less likely to make rational decisions concerning risk, and therefore are more easily targeted by the aggressive marketing of subprime lenders.
In the United States
The United States is one of the richest countries in the world (2nd behind Kuwait), and in 2000, the mean wealth was $144,000 per person.[6] In the United States at the end of 2001, 10% of the population owned 71% of the wealth, and the top 1% controlled 38%. On the other hand, the bottom 40% owned less than 1% of the nation's wealth.
In 2003, the most-earning 1% of the population in the United States, which has a system of progressive taxation, paid over 34% of the nation's federal income tax; the most-earning 10% bore 66% of the total tax load; the top 25% of income earners paid 84% of the income taxes; and the upper half accounted for virtually the entire U.S. income tax revenue (nearly 97%).
However, if the federal taxation rate ("Individual Income Tax Rates and Shares, 2004." (2006) published by IRS) is compared with the wealth distribution rate ("A Rolling Tide: Changes in the Distribution of Wealth in the U.S., 1989-2001 (2003)" by Arthur B. Kennickell at Levy Economics Institute), the net wealth (not only income but also including real estate, cars, house, stocks, etc) distribution of the United States does almost coincide with the the share of income tax - the top 1% pay 36.9% of federal tax (wealth 32.7%), the top 5% pay 57.1% (earning 57.2%), top 10% pay 68% (wealth 69.8%), and the bottom 50% pay 3.3% (wealth 2.8%)
Data, Charts, and Graphs
- PowerPoint presentation: Inequalities of Development - Lorenz Curve and Gini coefficient
- The World Distribution of Household Wealth
- Article on The World Distribution of Household Wealth report.
- The Federal Reserve Board - Survey of Consumer Finances
- Survey of Consumer Finances 1998-2004 charts - pdf
- Survey of Consumer Finances 1998-2004 data
and resulting Gini indices for mean incomes: 1989: 51.1, 1992: 47.8, 1995: 49.0, 1998: 50.4, 2001: 52.6, 2004: 51.4 - Changes in the Distribution of Wealth in the U.S., 1989-2001
- Report on Net Worth and Asset Ownership of Households
- Projections of the Number of Households in the U.S. 1995-2010
- The System of National Accounts (SNA): comparison of U.S. national accounts statistics with those of other countries
- World Trade Organization: Resources
World Distribution of Household Wealth by Region and Country
world distribution of wealth by country (PPP)
world distribution of wealth by region (PPP)
world distribution of wealth by country (exchange rates)
world distribution of wealth by region (exchange rates)
Data for the following tables obtained from The UN-WIDER World Distribution of Household Wealth Report
North America
| country | percent of world net worth (PPP) | percent of world net worth (exchange rates) |
| USA | 25.4 | 32.65 |
| Canada | 1.7 | 1.74 |
| total: | 27.1 | 34.39 |
South/Central America
| country | percent of world net worth (PPP) | percent of world net worth (exchange rates) |
| Argentina | 0.88 | 0.75 |
| Bahamas | 0.01 | 0.01 |
| Barbados | 0.02 | 0.01 |
| Bermuda | 0.01 | 0.01 |
| Brazil | 2.28 | 1.33 |
| Chile | 0.29 | 0.17 |
| Costa Rica | 0.04 | 0.03 |
| Cuba | 0.08 | 0.04 |
| Dominican Republic | 0.07 | 0.04 |
| Ecuador | 0.05 | 0.02 |
| El Salvador | 0.07 | 0.04 |
| Guadeloupe | 0.02 | 0.02 |
| Guatemala | 0.09 | 0.04 |
| Haiti | 0.03 | 0.01 |
| Honduras | 0.02 | 0.01 |
| Jamaica | 0.02 | 0.02 |
| Mexico | 1.34 | 1.05 |
| Nicaragua | 0.02 | 0 |
| Panama | 0.03 | 0.02 |
| Paraguay | 0.04 | 0.01 |
| Peru | 0.2 | 0.11 |
| Puerto Rico | 0.18 | 0.17 |
| Trinidad and Tobago | 0.04 | 0.02 |
| Uruguay | 0.04 | 0.03 |
| US Virgin Islands | 0.01 | 0 |
| Venezuela | 0.22 | 0.2 |
| total: | 6.1 | 4.16 |
Europe
| country | percent of world net worth (PPP) | percent of world net worth (exchange rates) |
| Albania | 0.02 | 0.01 |
| Austria | 0.34 | 0.4 |
| Belarus | 0.09 | 0.01 |
| Belgium | 0.55 | 0.63 |
| Bosnia and Herzegovina | 0.03 | 0.01 |
| Bulgaria | 0.08 | 0.02 |
| Croatia | 0.06 | 0.04 |
| Czech Republic | 0.21 | 0.09 |
| Denmark | 0.22 | 0.3 |
| Estonia | 0.02 | 0.01 |
| Finland | 0.12 | 0.15 |
| France | 3.46 | 4.07 |
| Georgia | 0.04 | 0.01 |
| Germany | 4.6 | 5.69 |
| Gibraltar | 0 | 0 |
| Greece | 0.5 | 0.44 |
| Greenland | 0 | 0.01 |
| Hungary | 0.21 | 0.11 |
| Iceland | 0.01 | 0.02 |
| Ireland | 0.21 | 0.25 |
| Italy | 4.3 | 4.54 |
| Latvia | 0.03 | 0.01 |
| Lithuania | 0.05 | 0.02 |
| Luxembourg | 0.05 | 0.06 |
| Macedonia | 0.02 | 0.01 |
| Monaco | 0 | 0 |
| Malta | 0.02 | 0.01 |
| Moldova | 0.02 | 0 |
| Netherlands | 1.19 | 1.39 |
| Netherlands Antilles | 0.01 | 0.01 |
| Norway | 0.2 | 0.29 |
| Poland | 0.59 | 0.32 |
| Portugal | 0.34 | 0.27 |
| Romania | 0.2 | 0.09 |
| Serbia and Montenegro | 0.08 | 0.02 |
| Slovakia | 0.08 | 0.03 |
| Slovenia | 0.04 | 0.03 |
| Spain | 2.34 | 2.24 |
| Sweden | 0.44 | 0.6 |
| Switzerland | 0.64 | 0.98 |
| UK | 4.71 | 5.95 |
| Ukraine | 0.3 | 0.05 |
| total: | 26.42 | 29.19 |
Middle East
| country | percent of world net worth (PPP) | percent of world net worth (exchange rates) |
| Afghanistan | 0.1 | 0.02 |
| Algeria | 0.14 | 0.05 |
| Armenia | 0.02 | 0 |
| Azerbaijan | 0.03 | 0.01 |
| Bahrain | 0.04 | 0.07 |
| Egypt | 0.7 | 0.31 |
| Iran | 0.73 | 0.62 |
| Iraq | 0.19 | 0.07 |
| Kazakhstan | 0.13 | 0.03 |
| Kuwait | 0.15 | 0.23 |
| Kyrgyzstan | 0.02 | 0 |
| Lebanon | 0.04 | 0.03 |
| Libya | 0.06 | 0.03 |
| Morocco | 0.25 | 0.09 |
| Oman | 0.03 | 0.02 |
| Pakistan | 0.56 | 0.14 |
| Palestinian Territory | 0.02 | 0.01 |
| Qatar | 0.04 | 0.06 |
| Jordan | 0.04 | 0.02 |
| Saudi Arabia | 0.31 | 0.28 |
| Somalia | 0.01 | 0 |
| Syria | 0.09 | 0.14 |
| Tajikistan | 0.01 | 0 |
| Turkey | 1.01 | 0.52 |
| Turkmenistan | 0.03 | 0.01 |
| United Arab Emirates | 0.21 | 0.34 |
| Uzbekistan | 0.1 | 0.02 |
| Yemen | 0.02 | 0.01 |
| total: | 5.08 | 3.13 |
Africa
| country | percent of world net worth (PPP) | percent of world net worth (exchange rates) |
| Burundi | 0.01 | 0 |
| Benin | 0.02 | 0.01 |
| Burkina Faso | 0.01 | 0 |
| Cameroon | 0.05 | 0.01 |
| Chad | 0.01 | 0 |
| Congo, Democratic Republic | 0.04 | 0.01 |
| Congo, Republic | 0.01 | 0 |
| Côte d'Ivoire | 0.06 | 0.02 |
| Eritrea | 0.01 | 0 |
| Ethiopia | 0.06 | 0.01 |
| Ghana | 0.05 | 0.01 |
| Guinea | 0.04 | 0.01 |
| Kenya | 0.07 | 0.02 |
| Madagascar | 0.02 | 0.01 |
| Malawi | 0.02 | 0.01 |
| Mauritius | 0.05 | 0.02 |
| Mozambique | 0.03 | 0.01 |
| Mali | 0.01 | 0 |
| Mauritania | 0.01 | 0 |
| Niger | 0.01 | 0 |
| Nigeria | 0.07 | 0.04 |
| Rwanda | 0.01 | 0 |
| Réunion | 0.01 | 0 |
| Senegal | 0.03 | 0.01 |
| Sierra Leone | 0.01 | 0 |
| South Africa | 0.46 | 0.22 |
| Sudan | 0.05 | 0.02 |
| Swaziland | 0.01 | 0 |
| Togo | 0.01 | 0 |
| Tunisia | 0.13 | 0.05 |
| Uganda | 0.04 | 0.01 |
| Zambia | 0.01 | 0.01 |
| Zimbabwe | 0.05 | 0.01 |
| total: | 1.48 | 0.52 |
Asia
| country | percent of world net worth (PPP) | percent of world net worth (exchange rates) |
| China | 8.77 | 2.62 |
| China, Hong Kong | 0.83 | 0.92 |
| China, Macao | 0.28 | 0.22 |
| China, Taiwan | 0.03 | 0.03 |
| Cambodia | 0.04 | 0.01 |
| India | 4.14 | 0.91 |
| Indonesia | 1.04 | 0.24 |
| Japan | 9.86 | 18.37 |
| Korea, North | 0.09 | 0.02 |
| Korea, South | 1.33 | 1.11 |
| Laos | 0.02 | 0 |
| Malaysia | 0.22 | 0.11 |
| Myanmar | 0.19 | 0.04 |
| Philippines | 0.67 | 0.21 |
| Singapore | 0.28 | 0.29 |
| Sri Lanka | 0.13 | 0.04 |
| Nepal | 0.1 | 0.02 |
| Thailand | 0.57 | 0.22 |
| Viet Nam | 0.28 | 0.07 |
| total: | 28.87 | 25.45 |
Others
| country | percent of world net worth (PPP) | percent of world net worth (exchange rates) |
| Russian Federation | 1.61 | 0.36 |
| Australia | 1.08 | 1.04 |
| New Zealand | 0.13 | 0.11 |
| Israel | 0.88 | 1.05 |
| total: | 3.7 | 2.56 |
References
- ^ http://www.iariw.org/abstracts/2006/daviesa.pdf
- ^ "Why it is hard to share the wealth"
- ^ Livy, Rome and Italy: Books VI-X of the History of Rome from its Foundation, Penguin Classics, ISBN 0-14-044388-6
- ^ "... A perceived sense of inequity is a common ingredient of rebellion in societies ...", Amartya Sen, 1973
- ^ "World Distribution of Household Wealth" UN et al. study
- ^ a b The rich really do own the world 05 December 2006
- ^ "Wealth Inequality Charts"
See also
- Lorenz curve
- Distribution (economics)
- Income distribution
- Debt
- Global debt
- Economic inequality
- Wealth condensation
- IQ and the Wealth of Nations
- List of countries by income equality
- Asset
- Income
- Expense
- Liability
- Wealth
- Wealth (economics)
- Free Market
- Planned economy
- Money
- Banking
- World Bank
- Social class
- Wealth redistribution
- Income redistribution
External links
- The Federal Reserve Board - Survey of Consumer Finances
- International Association for Research in Income and Wealth
- U.S. Census Bureau - Wealth and Asset Ownership
- U.S. Census Bureau - Income
- The White House - Economic Statistics Briefing Room
- A new study on The World Distribution of Household Wealth by the World Institute for Development Economics Research of the United Nations University (UNU-WIDER)
- UNU-WIDER press conference on the World Distribution of Household Wealth
- The distribution of wealth in america (2001)
- Wealth Happens - Wealth Distribution and the Role of Networks
- University of Michigan - Panel Study of Income Dynamics
- U.S. Bureau of Economic Analysis
- U.S. Wealth Distribution Data (1998)
- U.N. Development Program - Wealth Distribution Statistics (1999)
- Forbes Magaize - Mapping the Wealthy (2001)
- Economic Policy Institute - A state by state analysis of income trends
- Demographic Shifts in the Distribution of Wealth, 1992 to 1998
- Economist.com - Inequality in America: The rich, the poor and the growing gap between them
- IPPR, Centre for Asset-based welfare: Wealth Distribution - the Evidence
- A program that simulates the distribution of wealth
- Urban Institute - Income and Wealth Distribution
- Animation comparing the median US family income to the wealth of the wealthiest Americans
- Sectoral Shift, Wealth Distribution, and Development
- HM Revenue and Customs - Distribution of Personal Wealth (U.K.)
- Joseph Rowntree Foundation - Income and Wealth
- boundlessliving.com - wealth distribution
- Physica Scripta
- Wealth Distribution and Imperfect Factor Markets: A Classroom Experiment
- Book: Income and Wealth
- Joint Center for Housing Studies, Harvard University - Housing Wealth Effects: Housing's Impact on Wealth Accumulation, Wealth Distribution and Consumer Spending (Dec 2004)
- Introduction to mathematical modeling - modelling wealth distribution
- capitalism.org - Wealth Distribution
- Merill Lynch/Cap Gemini Ernst and Young - World Wealth Report (2003)
- inplainsight.info - Wealth Distribution
- a model of wealth distribution, based on an interactive multiplicative stochastic process on static complex networks.
- Some additional notes on the World Distribution of Wealth and the Solow model
- A study of 570 entities (governments, corporations, individuals) that have $9 billion or more in annual revenue
- University of Oregan - webquest: Wealth Distribution
- Wealth Distribution Statistics (1999)
- An activity that simulates the fight for wealth and power and inequality in the world
- Power Law Scaling in the World Income Distribution
- World Development Report - World Bank (2000/2001)
- Cap Gemini - World Wealth Report (2006)
- Intute - economics links
- Union of International Associations - Inequitable distribution of wealth
- report on distribution of wealth in Australia
- C.I.A. World Factbook: Field Listing - Distribution of family income - Gini index
- wages an distribution of wealth in the U.K.
- The Distribution of Wealth: A Theory of Wages, Interest and Profits
- Countries of the World - Gross National Product (GNP) per capita - 2005 (Wealth levels around the world)
- Encycolpedia Britannica - wealth and income, distribution of
- econoport.org - Distribution: Income, Wealth, Other - Article
- UNFPA - State of World Population 2002 - Macroeconomics, Poverty, Population and Development
- Conflict Resolution - crinfo.org - Distribution of Wealth
- distribution of wealth cartoons
- Topic Book 1: Economic and Social Justice
- The Distribution of Wealth and Why it Matters for Asset Pricing
- Merrill Lynch and Capgemini report sharp increases in wealthy North American and Asian investors
- U.N. statistics - Distribution of Income and Consumption; wealth and poverty
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