Distribution of wealth

From Wikipedia the free encyclopedia

World distribution of wealth, GDP, and population by region in the year 2000. Created with openoffice.org Calc. Data obtained from the UNU-WIDER report on worldwide distribution of household wealth: Press release. The World Distribution of Household Wealth. 5 December 2006. By James B. Davies, Susanna Sandstrom, Anthony Shorrocks, and Edward N. Wolff. Tables to the 2006 report in Excel (including Gini coefficients for 229 countries). UNU-WIDER.

The distribution of wealth is a comparison of the wealth of various members or groups in a society. It shows one aspect of economic inequality or economic heterogeneity.

The distribution of wealth differs from the income distribution in that it looks at the economic distribution of ownership of the assets in a society, rather than the current income of members of that society. According to the International Association for Research in Income and Wealth, "the world distribution of wealth is much more unequal than that of income."[1]

For rankings regarding wealth, see list of countries by wealth equality or list of countries by wealth per adult.

Definition of wealth[edit]

Wealth of an individual is defined as net worth, expressed as: wealth = assetsliabilities

A broader definition of wealth, which is rarely used in the measurement of wealth inequality, also includes human capital. For example, the United Nations definition of inclusive wealth is a monetary measure which includes the sum of natural, human and physical assets.[2][3]

The relation between wealth, income, and expenses is: :change of wealth = saving = income − consumption(expenses). If an individual has a large income but also large expenses, the net effect of that income on her or his wealth could be small or even negative. The term wealth should not be confused with rich. These two terms describe different but related things. Wealth consists of those items of economic value that an individual owns, while rich is an inflow of items of economic value. (See Stock and flow.)

Conceptual framework[edit]

There are many ways in which the distribution of wealth can be analyzed. One common-used example is to compare the amount of the wealth of individual at say 99 percentile relative to the wealth of the median (or 50th) percentile. This is P99/P50, which is one of the potential Kuznets ratios. Another common measure is the ratio of total amount of wealth in the hand of top say 1% of the wealth distribution over the total wealth in the economy. In many societies, the richest ten percent control more than half of the total wealth.

Pareto Distribution has often been used to mathematically quantify the distribution of wealth at the right tail (the wealth of very rich). In fact, the tail of wealth distribution, similar to the one of income distribution, behave like Pareto distribution but with ticker tail.

Wealth over people (WOP) curves are a visually compelling way to show the distribution of wealth in a nation. WOP curves are modified distribution of wealth curves. The vertical and horizontal scales each show percentages from zero to one hundred. We imagine all the households in a nation being sorted from richest to poorest. They are then shrunk down and lined up (richest at the left) along the horizontal scale. For any particular household, its point on the curve represents how their wealth compares (as a proportion) to the average wealth of the richest percentile. For any nation, the average wealth of the richest 1/100 of households is the topmost point on the curve (people, 1%; wealth, 100%) or (p=1, w=100) or (1, 100). In the real world two points on the WOP curve are always known before any statistics are gathered. These are the topmost point (1, 100) by definition, and the rightmost point (poorest people, lowest wealth) or (p=100, w=0) or (100, 0). This unfortunate rightmost point is given because there are always at least one percent of households (incarcerated, long term illness, etc.) with no wealth at all. Given that the topmost and rightmost points are fixed ... our interest lies in the form of the WOP curve between them. There are two extreme possible forms of the curve. The first is the "perfect communist" WOP. It is a straight line from the leftmost (maximum wealth) point horizontally across the people scale to p=99. Then it drops vertically to wealth = 0 at (p=100, w=0).

The other extreme is the "perfect tyranny" form. It starts on the left at the Tyrant's maximum wealth of 100%. It then immediately drops to zero at p=2, and continues at zero horizontally across the rest of the people. That is, the tyrant and his friends (the top percentile) own all the nation's wealth. All other citizens are serfs or slaves. An obvious intermediate form is a straight line connecting the left/top point to the right/bottom point. In such a "Diagonal" society a household in the richest percentile would have just twice the wealth of a family in the median (50th) percentile. Such a society is compelling to many (especially the poor). In fact it is a comparison to a diagonal society that is the basis for the Gini values used as a measure of the disequity in a particular economy. These Gini values (40.8 in 2007) show the United States to be the third most dis-equitable economy of all the developed nations (behind Denmark and Switzerland).

More sophisticated models have also been proposed.[4]

Inequality[edit]

Share of wealth globally by year, as seen by Oxfam,[5] based on the net worth[6]

Wealth distribution pyramid[edit]

Personal wealth varies across adults for many reasons. Some individuals with little wealth may be at early stages in their careers, with little chance or motivation to accumulate assets. Others may have suffered business setbacks or personal misfortunes, or live in parts of the world where opportunities for wealth creation are severely limited. At the other end of the spectrum, there are individuals who have acquired a large wealth through different ways. In Western countries, the most typical way of becoming wealthy is entrepreneurship (estimated three quarters of new millionaires).[citation needed] Other typical way (covering most of the remaining quarter) is pursuing a career with the end goal of becoming a C-level executive, a leading professional in a specific field (such as a doctor, lawyer, engineer) or a top corporate sales person. Only around 1% of new millionaires acquire their wealth via other means such as professional sports, show business, art, inventions, investing, inheritance or lottery.

Pyramid of global wealth distribution in 2013[7]

In 2013, Credit Suisse prepared a wealth pyramid infographic (shown right). Personal assets were calculated in net worth, meaning wealth would be negated by having any mortgages.[6] It has a large base of low wealth holders, alongside upper tiers occupied by progressively fewer people. In 2013 Credit-suisse estimate that 3.2 billion individuals – more than two thirds of adults in the world – have wealth below US$10,000. A further one billion (adult population) fall within the 10,000 – US$100,000 range. While the average wealth holding is modest in the base and middle segments of the pyramid, their total wealth amounts to US$40 trillion, underlining the potential for novel consumer products and innovative financial services targeted at this often neglected segment.[7]

The pyramid shows that:

  • half of the world's net wealth belongs to the top 1%,
  • top 10% of adults hold 85%, while the bottom 90% hold the remaining 15% of the world's total wealth,
  • top 30% of adults hold 97% of the total wealth.

Wealth distribution in 2012[edit]

According to the OECD in 2012 the top 0.6% of world population (consisting of adults with more than US$1 million in assets) or the 42 million richest people in the world held 39.3% of world wealth. The next 4.4% (311 million people) held 32.3% of world wealth. The bottom 95% held 28.4% of world wealth. The large gaps of the report get by the Gini index to 0.893, and are larger than gaps in global income inequality, measured in 2009 at 0.38.[8] For example, in 2012 the bottom 60% of the world population held same wealth in 2012 as the people on Forbes' Richest list consisting of 1,226 richest billionaires of the world.

21st century[edit]

Countries by total wealth (trillions USD), Credit Suisse

At the end of the 20th century, wealth was concentrated among the G8 and Western industrialized nations, along with several Asian and OPEC nations.

Wealth inequality[edit]

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 1% of global wealth.[9] Moreover, another study found that the richest 2% own more than half of global household assets.[10]

Real estate[edit]

While sizeable numbers of households own no land, few have no income. For example, the top 10% of land owners (all corporations) in Baltimore, Maryland own 58% of the taxable land value. The bottom 10% of those who own any land own less than 1% of the total land value.[11] This form of analysis as well as Gini coefficient analysis has been used to support land value taxation.

Credit Suisse Report – Wealth Distribution & Gini (2019)[edit]

This table was created from information provided by the Credit Suisse Research Institute's "Global Wealth Databook", Table 3.1, published 2019.[12]

Country Adults
(1,000)
Wealth per
adult (USD)
Distribution of adults (%) by wealth range (USD) Gini
(%)
Mean Median Under 10k 10k – 100k 100k – 1M Over 1M Total
 Afghanistan 16,838 1,463 640 98.6 1.4 0.0 0.0 100 65.5
 Albania 2,225 31,366 14,731 38.0 57.9 3.9 0.1 100 63.7
 Algeria 26,983 9,348 3,267 78.7 20.4 0.9 0.0 100 74.9
 Angola 13,403 3,649 1,370 94.0 5.8 0.2 0.0 100 73.1
 Antigua and Barbuda 71 24,964 6,961 61.0 35.2 3.6 0.2 100 82.3
 Argentina 30,320 10,256 3,164 81.2 17.8 0.9 0.1 100 76.8
 Armenia 2,177 19,517 8,309 55.0 42.7 2.2 0.1 100 66.3
 Aruba 80 58,033 21,750 30.0 58.0 11.6 0.4 100 70.3
 Australia 18,655 386,058 181,361 6.7 27.6 59.4 6.3 100 65.6
 Austria 7,092 274,919 94,070 22.9 28.3 44.5 4.4 100 73.9
 Azerbaijan 6,997 11,865 5,150 70.1 28.8 1.0 0.0 100 65.4
 Bahamas 292 76,507 20,129 39.0 46.0 14.1 0.9 100 82.8
 Bahrain 1,219 87,108 30,946 29.5 50.5 19.1 0.9 100 74.7
 Bangladesh 104,872 6,643 2,787 84.6 14.9 0.4 0.0 100 67.8
 Barbados 214 64,658 20,497 37.0 50.0 12.4 0.6 100 77.8
 Belarus 7,390 16,590 7,931 56.5 42.0 1.4 0.0 100 62.1
 Belgium 8,913 246,135 117,093 0.0 45.1 51.8 3.1 100 60.3
 Belize 228 10,864 3,166 78.0 20.7 1.2 0.1 100 80.3
 Benin 5,475 2,166 845 97.2 2.7 0.1 0.0 100 70.7
 Bolivia 6,678 11,672 3,843 76.1 22.6 1.2 0.1 100 76.4
 Bosnia and Herzegovina 2,815 27,873 13,037 42.0 54.5 3.4 0.1 100 64.2
 Botswana 1,409 14,684 4,550 73.0 24.8 2.1 0.1 100 80.0
 Brazil 150,089 58,268 29,134 57.9 36.0 5.3 0.8 100 74.9
 Brunei 304 44,541 13,634 44.0 49.6 6.0 0.4 100 78.7
 Bulgaria 5,697 42,686 18,948 32.2 61.2 6.4 0.2 100 65.9
 Burkina Faso 8,862 1,440 589 98.6 1.4 0.0 0.0 100 68.8
 Burundi 5,131 609 250 99.6 0.4 0.0 0.0 100 68.1
 Cambodia 9,797 5,395 2,029 90.5 9.1 0.4 0.0 100 71.8
 Cameroon 11,754 2,840 1,036 95.5 4.3 0.2 0.0 100 74.3
 Canada 29,136 294,255 107,004 20.4 28.4 46.7 4.5 100 72.8
 Central African Republic 2,183 749 244 99.3 0.7 0.0 0.0 100 77.7
 Chad 6,551 1,167 435 98.8 1.1 0.0 0.0 100 73.0
 Chile 13,331 56,972 19,231 38.6 52.4 8.6 0.5 100 79.8
 China 1,090,231 58,544 20,942 24.6 65.0 10.0 0.4 100 70.2
 Colombia 34,254 16,411 5,325 68.3 29.7 1.9 0.1 100 77.0
 Comoros 423 5,155 1,679 91.5 8.1 0.4 0.0 100 78.3
 Congo, Dem. Rep. 37,100 1,084 382 98.8 1.1 0.0 0.0 100 75.5
 Congo, Rep. 2,618 2,701 913 95.6 4.2 0.2 0.0 100 76.9
 Costa Rica 3,547 33,683 11,793 46.3 48.6 4.9 0.2 100 75.0
 Croatia 3,329 62,804 29,183 20.0 66.8 12.9 0.4 100 64.5
 Cyprus 918 116,207 28,803 24.0 59.0 15.7 1.3 100 80.1
 Czech Republic 8,509 64,663 20,854 23.3 66.9 9.3 0.5 100 72.5
 Denmark 4,475 284,022 58,784 35.8 20.6 38.3 5.3 100 83.8
 Djibouti 583 2,936 1,120 95.4 4.4 0.1 0.0 100 72.9
 Dominica 55 33,306 9,447 52.0 42.8 4.9 0.3 100 82.3
 Ecuador 10,725 19,144 6,399 62.9 34.7 2.2 0.1 100 75.9
 Egypt 58,309 15,395 4,900 71.4 26.9 1.6 0.1 100 75.6
 El Salvador 4,087 29,870 10,148 49.6 46.1 4.1 0.2 100 74.3
 Equatorial Guinea 724 17,559 5,545 70.0 27.2 2.7 0.1 100 79.3
 Eritrea 2,526 4,134 1,910 92.3 7.5 0.2 0.0 100 62.1
 Estonia 1,028 78,458 24,915 23.5 61.0 14.8 0.7 100 71.6
 Ethiopia 52,970 3,085 1,360 96.1 3.7 0.1 0.0 100 62.0
 Fiji 580 15,598 6,126 64.0 34.2 1.7 0.1 100 70.2
 Finland 4,341 183,124 55,532 19.0 43.8 34.8 2.4 100 74.2
 France 49,722 276,121 101,942 14.0 35.5 46.3 4.2 100 69.6
 Gabon 1,149 15,113 6,035 66.0 32.4 1.6 0.1 100 71.9
 Gambia 969 2,141 694 96.6 3.3 0.1 0.0 100 77.1
 Georgia 2,932 12,609 5,226 70.0 28.7 1.2 0.0 100 68.7
 Germany 67,668 216,654 35,313 40.6 21.0 35.2 3.2 100 81.6
 Ghana 15,377 4,292 1,706 92.5 7.2 0.2 0.0 100 69.9
 Greece 9,021 96,110 40,000 14.3 61.3 23.6 0.8 100 65.4
 Grenada 71 45,272 12,218 46.0 47.3 6.2 0.5 100 82.7
 Guinea 6,268 2,185 802 96.9 3.0 0.1 0.0 100 74.1
 Guinea-Bissau 936 1,647 655 98.1 1.8 0.1 0.0 100 71.2
 Guyana 482 11,349 3,829 76.0 22.9 1.0 0.1 100 73.4
 Haiti 6,426 723 214 99.3 0.7 0.0 0.0 100 80.1
 Hong Kong SAR 6,267 489,258 146,887 13.0 29.3 49.5 8.2 100 77.7
 Hungary 7,803 44,321 17,666 33.6 58.8 7.3 0.2 100 66.3
 Iceland 250 380,868 165,961 16.0 23.0 54.5 6.5 100 69.4
 India 865,783 14,569 3,042 78.2 20.0 1.7 0.1 100 83.2
 Indonesia 172,908 10,545 1,977 81.6 17.3 1.0 0.1 100 83.3
 Iran 57,686 13,437 5,254 68.8 29.7 1.4 0.0 100 70.5
 Iraq 19,788 16,540 7,331 58.9 39.5 1.6 0.1 100 63.3
 Ireland 3,491 272,310 104,842 25.8 23.3 46.5 4.5 100 79.6
 Israel 5,499 196,568 58,066 18.0 46.2 33.5 2.4 100 77.7
 Italy 48,509 234,139 91,889 5.8 46.2 44.9 3.1 100 66.9
 Jamaica 2,002 20,878 6,798 61.0 36.2 2.6 0.1 100 77.5
 Japan 104,963 238,104 110,408 4.6 42.6 49.9 2.9 100 62.6
 Jordan 5,512 26,475 10,947 47.8 48.8 3.3 0.1 100 69.6
 Kazakhstan 12,147 26,317 6,642 61.8 34.6 3.4 0.2 100 77.2
 Kenya 25,384 9,791 3,553 77.5 21.5 0.9 0.0 100 74.5
 Korea 41,721 175,015 72,198 0.0 66.9 31.3 1.8 100 60.6
 Kuwait 3,086 131,269 46,218 29.3 44.2 24.5 2.0 100 76.3
 Kyrgyzstan 3,721 5,758 2,412 88.0 11.6 0.4 0.0 100 68.1
 Laos 4,042 6,720 2,002 87.2 12.0 0.7 0.0 100 79.4
 Latvia 1,536 60,347 13,348 44.0 45.0 10.4 0.6 100 78.9
 Lebanon 4,205 55,226 12,198 45.2 46.0 8.2 0.5 100 81.9
 Lesotho 1,233 1,313 384 98.1 1.9 0.1 0.0 100 80.5
 Liberia 2,350 2,169 820 97.1 2.8 0.1 0.0 100 72.7
 Libya 4,169 19,473 8,330 55.2 42.7 2.0 0.1 100 65.9
 Lithuania 2,296 50,254 22,261 28.0 63.6 8.1 0.3 100 66.3
 Luxembourg 461 358,003 139,789 0.0 40.0 55.1 4.9 100 67.0
 Madagascar 12,909 1,610 626 98.1 1.8 0.1 0.0 100 72.2
 Malawi 8,798 1,313 468 98.4 1.5 0.1 0.0 100 75.1
 Malaysia 21,823 31,270 8,940 53.4 42.7 3.7 0.2 100 79.6
 Maldives 315 23,297 8,555 54.0 42.8 3.1 0.1 100 72.4
 Mali 8,088 1,955 773 97.6 2.3 0.1 0.0 100 70.7
 Malta 349 143,566 76,016 14.0 48.0 36.7 1.3 100 64.0
 Mauritania 2,310 2,397 976 97.0 2.9 0.1 0.0 100 68.1
 Mauritius 951 50,796 20,875 30.0 60.0 9.7 0.3 100 66.2
 Mexico 85,594 31,553 9,944 50.2 45.2 4.4 0.2 100 77.7
 Moldova 3,193 12,804 5,855 66.2 32.6 1.1 0.0 100 64.5
 Mongolia 1,986 6,135 2,654 86.5 13.1 0.4 0.0 100 66.8
 Montenegro 477 53,484 24,242 25.0 65.0 9.7 0.3 100 64.8
 Morocco 23,613 12,929 4,010 75.5 23.1 1.3 0.1 100 76.6
 Mozambique 13,814 880 352 99.3 0.7 0.0 0.0 100 71.6
 Myanmar 34,915 3,323 1,556 96.1 3.8 0.1 0.0 100 59.7
 Namibia 1,395 17,220 5,502 69.5 27.8 2.7 0.1 100 78.8
 Nepal 17,585 3,870 1,510 94.0 5.8 0.2 0.0 100 71.0
 Netherlands 13,326 279,077 31,057 45.1 13.4 35.3 6.2 100 90.2
 New Zealand 3,525 304,124 116,437 9.3 36.8 48.8 5.2 100 67.2
 Nicaragua 3,937 9,279 3,005 80.5 18.6 0.9 0.0 100 75.9
 Niger 8,909 1,126 463 99.1 0.9 0.0 0.0 100 68.2
 Nigeria 90,731 4,881 1,249 92.9 6.7 0.4 0.0 100 80.9
 Norway 4,100 267,348 70,627 28.2 27.0 40.8 4.0 100 79.8
 Oman 3,608 43,291 14,723 43.2 50.2 6.2 0.3 100 78.6
 Pakistan 113,388 4,098 1,766 93.4 6.4 0.2 0.0 100 66.5
 Panama 2,711 39,980 13,259 44.7 48.9 6.1 0.3 100 78.0
 Papua New Guinea 4,611 6,485 2,120 87.2 12.2 0.6 0.0 100 76.6
 Paraguay 4,268 11,865 3,887 75.6 23.1 1.2 0.1 100 76.8
 Peru 21,132 17,843 4,989 71.2 26.8 1.9 0.1 100 78.8
 Philippines 63,365 12,063 2,618 84.1 14.7 1.1 0.1 100 83.7
 Poland 30,598 57,873 22,600 26.8 62.6 10.2 0.4 100 67.7
 Portugal 8,373 131,088 44,025 14.7 54.7 29.3 1.4 100 69.2
 Qatar 2,223 147,745 69,671 10.7 49.7 38.4 1.3 100 63.3
 Romania 15,517 43,074 19,582 29.8 62.9 7.2 0.2 100 64.7
 Russia 111,481 27,381 3,683 79.1 18.1 2.7 0.2 100 87.9
 Rwanda 6,313 3,435 1,259 94.4 5.4 0.2 0.0 100 74.2
 Samoa 106 37,066 13,286 44.0 50.2 5.5 0.3 100 74.7
 Sao Tome and Principe 98 3,654 1,545 94.3 5.5 0.2 0.0 100 67.4
 Saudi Arabia 23,208 67,032 16,599 41.4 47.8 10.2 0.6 100 83.4
 Senegal 7,763 4,265 1,632 92.6 7.2 0.2 0.0 100 72.6
 Serbia 6,798 25,046 10,737 47.9 48.7 3.3 0.1 100 67.6
 Seychelles 68 57,835 22,572 33.0 54.0 12.6 0.4 100 70.4
 Sierra Leone 3,698 693 278 99.5 0.4 0.0 0.0 100 69.4
 Singapore 4,637 297,873 96,967 14.0 36.6 44.9 4.5 100 75.7
 Slovakia 4,340 66,171 40,432 0.0 83.2 16.6 0.2 100 49.8
 Slovenia 1,675 122,508 50,380 4.5 66.0 28.6 0.9 100 66.2
 Solomon Islands 321 12,933 5,260 71.0 27.6 1.4 0.0 100 70.0
 South Africa 36,027 21,380 6,476 64.6 32.2 3.1 0.1 100 80.6
 Spain 37,450 207,531 95,360 16.9 34.5 45.9 2.6 100 69.4
 Sri Lanka 14,408 20,628 8,283 55.1 42.1 2.7 0.1 100 70.0
 St. Lucia 133 36,586 13,418 43.0 51.4 5.3 0.3 100 72.8
 St. Vincent and the Grenadines 75 20,088 5,508 68.0 29.0 2.8 0.2 100 81.8
 Sudan 20,474 534 218 99.7 0.3 0.0 0.0 100 68.7
 Suriname 373 6,089 1,562 90.2 9.1 0.7 0.0 100 83.2
 Sweden 7,723 265,260 41,582 35.8 28.9 30.5 4.8 100 86.7
 Switzerland 6,866 564,653 227,891 13.0 20.7 54.5 11.8 100 70.5
 Syria 9,664 2,179 884 97.1 2.8 0.1 0.0 100 69.9
 Taiwan (Chinese Taipei) 19,296 210,525 70,191 15.4 43.5 38.3 2.7 100 75.1
 Tajikistan 5,118 3,602 1,589 94.8 5.1 0.2 0.0 100 65.6
 Tanzania 26,837 3,069 1,282 95.7 4.1 0.1 0.0 100 66.1
 Thailand 53,073 21,854 3,726 71.1 26.6 2.2 0.2 100 84.6
 Timor-Leste 602 5,143 2,453 91.6 8.1 0.2 0.0 100 56.5
 Togo 3,909 1,241 469 98.7 1.3 0.0 0.0 100 73.4
 Tonga 59 47,889 19,709 33.0 57.8 8.9 0.3 100 68.2
 Trinidad and Tobago 1,006 41,094 14,888 41.0 52.2 6.5 0.3 100 73.2
 Tunisia 8,111 13,853 5,395 68.6 30.0 1.4 0.0 100 70.5
 Turkey 55,543 24,398 6,568 62.3 34.8 2.7 0.2 100 79.4
 Turkmenistan 3,607 15,691 6,974 60.3 38.3 1.4 0.0 100 63.0
 Uganda 18,650 1,603 612 98.1 1.9 0.1 0.0 100 72.9
 Ukraine 34,998 8,792 1,223 88.8 10.4 0.8 0.1 100 84.7
 United Arab Emirates 7,874 117,060 35,315 32.5 44.8 21.2 1.6 100 79.6
 United Kingdom 51,209 280,049 97,452 17.4 33.0 44.8 4.8 100 74.6
 United States 245,140 432,365 65,904 26.9 31.0 34.5 7.6 100 85.2
 Uruguay 2,501 30,320 11,084 47.7 48.2 4.0 0.2 100 72.1
 Vanuatu 157 15,090 6,098 64.0 34.4 1.5 0.1 100 68.8
 Venezuela 20,912 1 0 100.0 0.0 0.0 0.0 100 74.3
 Vietnam 68,085 11,712 3,679 78.0 20.8 1.1 0.1 100 76.1
 Yemen 14,580 4,926 1,467 93.3 6.3 0.5 0.0 100 79.8
 Zambia 7,926 2,565 784 95.7 4.1 0.2 0.0 100 79.8
 Zimbabwe 8,340 4,734 1,843 90.8 8.9 0.3 0.0 100 71.9

In the United States[edit]

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Distribution of net worth in the United States (2007). The net wealth of many people in the lowest 20% is negative because of debt.[13]

  Top 1% (35%)
  Next 4% (27%)
  Next 5% (11%)
  Next 10% (12%)
  Upper Middle 20% (11%)
  Middle 20% (4%)
  Bottom 40% (<1%)

According to PolitiFact, in 2011 the 400 wealthiest Americans "have more wealth than half of all Americans combined."[14][15][16][17] Inherited wealth may help explain why many Americans who have become rich may have had a "substantial head start".[18][19] In September 2012, according to the Institute for Policy Studies, "over 60 percent" of the Forbes richest 400 Americans "grew up in substantial privilege".[20]

In 2007, the richest 1% of the American population owned 34.6% of the country's total wealth (excluding human capital),[clarification needed] and the next 19% owned 50.5%. The top 20% of Americans owned 85% of the country's wealth and the bottom 80% of the population owned 15%. From 1922 to 2010, the share of the top 1% varied from 19.7% to 44.2%, the big drop being associated with the drop in the stock market in the late 1970s. Ignoring the period where the stock market was depressed (1976–1980) and the period when the stock market was overvalued (1929), the share of wealth of the richest 1% remained extremely stable, at about a third of the total wealth.[21] Financial inequality was greater than inequality in total wealth, with the top 1% of the population owning 42.7%, the next 19% of Americans owning 50.3%, and the bottom 80% owning 7%.[22] However, after the Great Recession which started in 2007, the share of total wealth owned by the top 1% of the population grew from 34.6% to 37.1%, and that owned by the top 20% of Americans grew from 85% to 87.7%. The Great Recession also caused a drop of 36.1% in median household wealth but a drop of only 11.1% for the top 1%, further widening the gap between the 1% and the 99%.[13][21][22] During the economic expansion between 2002 and 2007, the income of the top 1% grew 10 times faster than the income of the bottom 90%. In this period 66% of total income gains went to the 1%, who in 2007 had a larger share of total income than at any time since 1928.

Dan Ariely and Michael Norton show in a study (2011) that US citizens across the political spectrum significantly underestimate the current US wealth inequality and would prefer a more egalitarian distribution of wealth, raising questions about ideological disputes over issues like taxation and welfare.[23]

Wealth proportion by population by year (including homes)[21][24]
Year Bottom
99%
Top
1%
1922 63.3% 36.7%
1929 55.8% 44.2%
1933 66.7% 33.3%
1939 63.6% 36.4%
1945 70.2% 29.8%
1949 72.9% 27.1%
1953 68.8% 31.2%
1962 68.2% 31.8%
1965 65.6% 34.4%
1969 68.9% 31.1%
1972 70.9% 29.1%
1976 80.1% 19.9%
1979 79.5% 20.5%
1981 75.2% 24.8%
1983 69.1% 30.9%
1986 68.1% 31.9%
1989 64.3% 35.7%
1992 62.8% 37.2%
1995 61.5% 38.5%
1998 61.9% 38.1%
2001 66.6% 33.4%
2004 65.7% 34.3%
2007 65.4% 34.6%
2010 64.6% 35.4%
Wealth inequality in the United States increased from 1989 to 2013.[25]

World distribution of wealth[edit]

Worlds regions by total wealth (in trillions USD), 2018

By region[edit]

Region Proportion of world (%)[21][26]
Population Net worth GDP
PPP Exchange rates PPP Exchange rates
North America 5.2 27.1 34.4 23.9 33.7
Central/South America 8.5 6.5 4.3 8.5 6.4
Europe 9.6 26.4 29.2 22.8 32.4
Africa 10.7 1.5 0.5 2.4 1.0
Middle East 9.9 5.1 3.1 5.7 4.1
Asia 52.2 29.4 25.6 31.1 24.1
Other 3.2 3.7 2.6 5.4 3.4
Totals (rounded) 100% 100% 100% 100% 100%

World distribution of financial wealth. In 2007, 147 companies controlled nearly 40 percent of the monetary value of all transnational corporations.[27]

Wealth concentration[edit]

Wealth concentration is a process by which created wealth, under some conditions, can become concentrated by individuals or entities. Those who hold wealth have the means to invest in newly created sources and structures of wealth, or to otherwise leverage the accumulation of wealth, and are thus the beneficiaries of even greater wealth.

Economic conditions[edit]

Global share of wealth by wealth group

The first necessary condition for the phenomenon of wealth concentration to occur is an unequal initial distribution of wealth. The distribution of wealth throughout the population is often closely approximated by a Pareto distribution, with tails which decay as a power-law in wealth. (See also: Distribution of wealth and Economic inequality). According to PolitiFact and others, the 400 wealthiest Americans had "more wealth than half of all Americans combined."[14][15][16][17] Inherited wealth may help explain why many Americans who have become rich may have had a "substantial head start".[18][19] In September 2012, according to the Institute for Policy Studies, "over 60 percent" of the Forbes richest 400 Americans "grew up in substantial privilege".[20]

The second condition is that a small initial inequality must, over time, widen into a larger inequality. This is an example of positive feedback in an economic system. A team from Jagiellonian University produced statistical model economies showing that wealth condensation can occur whether or not total wealth is growing (if it is not, this implies that the poor could become poorer).[28]

Joseph E. Fargione, Clarence Lehman and Stephen Polasky demonstrated in 2011 that chance alone, combined with the deterministic effects of compounding returns, can lead to unlimited concentration of wealth, such that the percentage of all wealth owned by a few entrepreneurs eventually approaches 100%.[29][30]

Correlation between being rich and earning more[edit]

Given an initial condition in which wealth is unevenly distributed (i.e., a "wealth gap"[31]), several non-exclusive economic mechanisms for wealth condensation have been proposed:

  • A correlation between being rich and being given high paid employment (oligarchy).
  • A marginal propensity to consume low enough that high incomes are correlated with people who have already made themselves rich (meritocracy).
  • The ability of the rich to influence government disproportionately to their favor thereby increasing their wealth (plutocracy).[32]

In the first case, being wealthy gives one the opportunity to earn more through high paid employment (e.g., by going to elite schools). In the second case, having high paid employment gives one the opportunity to become rich (by saving your money). In the case of plutocracy, the wealthy exert power over the legislative process, which enables them to increase the wealth disparity.[33] An example of this is the high cost of political campaigning in some countries, in particular in the US (more generally, see also plutocratic finance).

Because these mechanisms are non-exclusive, it is possible for all three explanations to work together for a compounding effect, increasing wealth concentration even further. Obstacles to restoring wage growth might have more to do with the broader dysfunction of a dollar dominated system particular to the US than with the role of the extremely wealthy.[34]

Counterbalances to wealth concentration include certain forms of taxation, in particular wealth tax, inheritance tax and progressive taxation of income. However, concentrated wealth does not necessarily inhibit wage growth for ordinary workers.[35]

Markets with social influence[edit]

Product recommendations and information about past purchases have been shown to influence consumers choices significantly whether it is for music, movie, book, technological, and other type of products. Social influence often induces a rich-get-richer phenomenon (Matthew effect) where popular products tend to become even more popular.[36]

Redistribution of wealth and public policy[edit]

In many societies, attempts have been made, through property redistribution, taxation, or regulation, to redistribute wealth, sometimes in support of the upper class, and sometimes to diminish economic inequality.

Examples of this practice go back at least to the Roman republic in the third century B.C.,[37] 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 the belief that limiting wealth will gain the political favor of a voting bloc, or fear that extreme concentration of wealth results in rebellion.[38] Various forms of socialism attempt to diminish the unequal distribution of wealth and thus the conflicts and social problems arising from it.[39]

During the Age of Reason, Francis Bacon wrote "Above all things good policy is to be used so that the treasures and monies in a state be not gathered into a few hands… Money is like fertilizer, not good except it be spread."[40]

The rise of Communism as a political movement has partially been attributed to the distribution of wealth under capitalism in which a few lived in luxury while the masses lived in extreme poverty or deprivation. However, in the Critique of the Gotha Program, Marx and Engels criticized German Social Democrats for placing emphasis on issues of distribution instead of on production and ownership of productive property.[41] While the ideas of Marx have nominally influenced various states in the 20th century, the Marxist notions of socialism and communism remains elusive.[42][vague]

On the other hand, the combination of labor movements, technology, and social liberalism has diminished extreme poverty in the developed world today, though extremes of wealth and poverty continue in the Third World.[43]

In the Outlook on the Global Agenda 2014 from the World Economic Forum the widening income disparities come second as a worldwide risk.[44][45]

See also[edit]

References[edit]

  1. ^ Davies, James B.; Sandström, Susanna; Shorrocks, Anthony F.; Wolff, Edward N. "Estimating the World Distribution of Household Wealth" (PDF). Institution/Country: University of Western Ontario, Canada; WIDER-UNU. Retrieved 2016-09-10.
  2. ^ "Free exchange: The real wealth of nations". The Economist. 2012-06-30. Retrieved 2012-07-14.
  3. ^ "Inclusive Wealth Report – IHDP". Ihdp.unu.edu. 2012-07-09. Archived from the original on 2012-06-30. Retrieved 2012-07-14.
  4. ^ "Why it is hard to share the wealth". New Scientist. 2005-03-12. Retrieved 2012-03-26.
  5. ^ "62 people own same as half world – Oxfam | Press releases | Oxfam GB". Oxfam.org.uk. 2016-01-18. Retrieved 2016-09-10.
  6. ^ a b "Yes, Oxfam, the Richest 1% Have Most of the Wealth. But That Means Less Than You Think". Time.
  7. ^ a b "Global Wealth Report 2013". credit-suisse.com. Archived from the original on 2015-02-14. Retrieved 2016-06-30.
  8. ^ "The World Factbook – Central Intelligence Agency". Cia.gov. Archived from the original on July 16, 2017. Retrieved 2016-09-10.
  9. ^ The World Distribution of Household Wealth. James B. Davies, Susanna Sandstrom, Anthony Shorrocks, and Edward N. Wolff. 5 December 2006.
  10. ^ The rich really do own the world 5 December 2006
  11. ^ Kromkowski, "Who owns Baltimore", CSE/HGFA, 2007.
  12. ^ Source Credit Suisse, Research Institute – Global Wealth Databook 2019
  13. ^ a b Working Paper No. 589 Recent Trends in Household Wealth in the United States: Rising Debt and the Middle-Class Squeeze – an Update to 2007 by Edward N. Wolff, Levy Economics Institute of Bard College, March 2010
  14. ^ a b Kertscher, Tom; Borowski, Greg (March 10, 2011). "The Truth-O-Meter Says: True – Michael Moore says 400 Americans have more wealth than half of all Americans combined". PolitiFact. Retrieved August 11, 2013.
  15. ^ a b Moore, Michael (March 6, 2011). "America Is Not Broke". Huffington Post. Retrieved August 11, 2013.
  16. ^ a b Moore, Michael (March 7, 2011). "The Forbes 400 vs. Everybody Else". michaelmoore.com. Archived from the original on 2011-03-09. Retrieved August 11, 2013.
  17. ^ a b Pepitone, Julianne (September 22, 2010). "Forbes 400: The super-rich get richer". CNN. Retrieved August 11, 2013.
  18. ^ a b Bruenig, Matt (March 24, 2014). "You call this a meritocracy? How rich inheritance is poisoning the American economy". Salon. Retrieved August 24, 2014.
  19. ^ a b Staff (March 18, 2014). "Inequality – Inherited wealth". The Economist. Retrieved August 24, 2014.
  20. ^ a b Pizzigati, Sam (September 24, 2012). "The 'Self-Made' Hallucination of America's Rich". Institute for Policy Studies. Retrieved August 24, 2014.
  21. ^ a b c d Wealth, Income, and Power by G. William Domhoff of the UC-Santa Barbara Sociology Department
  22. ^ a b Occupy Wall Street And The Rhetoric of Equality Forbes November 1, 2011 by Deborah L. Jacobs
  23. ^ Norton, M. I., & Ariely, D., "Building a Better America – One Wealth Quintile at a Time", Perspectives on Psychological Science, January 2011 6: 9-12
  24. ^ 1922–1989 data from Wolff (1996), 1992–2010 data from Wolff (2012)
  25. ^ "Trends in Family Wealth, 1989 to 2013". Congressional Budget Office. August 18, 2016.
  26. ^ Data for the following table obtained from UNU-WIDER World Distribution of Household Wealth Report (The University of California also hosts a copy of the report)
  27. ^ Financial world dominated by a few deep pockets. By Rachel Ehrenberg. September 24, 2011; Vol.180 #7 (p. 13). Science News. Citation is in the right sidebar. Paper is here [1] with PDF here [2].
  28. ^ Burdaa, Z.; et al. (January 22, 2001). "Wealth Condensation in Pareto Macro-Economies" (PDF). Physical Review E. 65 (2). arXiv:cond-mat/0101068. Bibcode:2002PhRvE..65b6102B. doi:10.1103/PhysRevE.65.026102. Retrieved September 11, 2013.
  29. ^ Joseph E. Fargione et al.: Entrepreneurs, Chance, and the Deterministic Concentration of Wealth.
  30. ^ Simulation of wealth concentration according to Fargione, Lehman and Polasky
  31. ^ Rugaber, Christopher S.; Boak, Josh (January 27, 2014). "Wealth gap: A guide to what it is, why it matters". AP News. Retrieved January 27, 2014.
  32. ^ Batra, Ravi (2007). The New Golden Age: The Coming Revolution against Political Corruption and Economic Chaos. Palgrave Macmillan. ISBN 1-4039-7579-5.
  33. ^ Channer, Harold Hudson (25 July 2011). "TV interview with Dr. Ravi Batra". Retrieved 21 October 2011.
  34. ^ Bessen, James (2015). Learning by Doing: The Real Connection between Innovation, Wages, and Wealth. Yale University Press. pp. 226–27. ISBN 978-0300195668. The obstacles to restoring wage growth might have more to do with the broader dysfunction of our dollar- dominated political system than with the particular role of the extremely wealthy.
  35. ^ Bessen, James (2015). Learning by Doing: The Real Connection between Innovation, Wages, and Wealth. Yale University Press. p. 3. ISBN 978-0300195668. However, concentrated wealth does not necessarily inhibit wage growth.
  36. ^ Altszyler, E; Berbeglia, F.; Berbeglia, G.; Van Hentenryck, P. (2017). "Transient dynamics in trial-offer markets with social influence: Trade-offs between appeal and quality". PLoS ONE. 12 (7): e0180040. Bibcode:2017PLoSO..1280040A. doi:10.1371/journal.pone.0180040. PMC 5528888. PMID 28746334.
  37. ^ Livy, Rome and Italy: Books VI-X of the History of Rome from its Foundation, Penguin Classics, ISBN 0-14-044388-6
  38. ^ "… A perceived sense of inequity is a common ingredient of rebellion in societies …", Amartya Sen, 1973
  39. ^ "The Spirit Level" by Richard Wilkinson and Kate Pickett;Bloomsbury Press 2009
  40. ^ Francis Bacon, Of Seditions and Troubles
  41. ^ Critique of the Gotha Program, Karl Marx. Part I: "Quite apart from the analysis so far given, it was in general a mistake to make a fuss about so-called distribution and put the principal stress on it."
  42. ^ Archie Brown, The Rise and Fall of Communism, Ecco, 2009, ISBN 978-0-06-113879-9
  43. ^ Jeffrey D. Sachs, The End of Poverty, Penguin, 2006, ISBN 978-0-14-303658-6
  44. ^ "Outlook on the Global Agenda 2014 – Reports". Reports.weforum.org. World Economic Forum. Retrieved 2016-09-10.
  45. ^ "178 Oxfam Briefing Paoer" (PDF). Oxfam.org. 20 January 2014. Retrieved 2016-09-10.

External links[edit]

Wealth surveys[edit]

Many countries have national wealth surveys, for example:

Additional data, charts, and graphs[edit]

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