World Wealth Inequalities
Monday, July 25, 2011
Tuesday, May 31, 2011
World Wealth Inequalities
World Wealth Inequalities
The concentration of wealth within countries varies significantly but is generally high. The share of the top 10% ranges from around 40% in China to 70% in the United States, and higher still in other countries. The Gini value, which measures inequality on a scale from zero to one, gives numbers in the range from 35% to 45% for income inequality in most countries. In contrast, Gini values for wealth inequality are usually between 65% and 75%, and sometimes exceed 80%. Two high wealth economies, Japan and the United States, show very different patterns of wealth inequality, with Japan having a wealth Gini of 55% and the USA a wealth Gini of around 80%.
Wealth inequality for the world as a whole is higher still. The study estimates that the global wealth Gini for adults is 89%. The same degree of inequality would be obtained if one person in a group of ten takes 99% of the total pie and the other nine shares the remaining 1%.
Where does the world’s wealthy live?
According to the study, almost all of the world’s richest individuals live in North America, Europe, and rich Asia-Pacific countries. Each of these groups of countries contribute about one third of the members of the world’s wealthiest 10%.
China occupies much of the middle third of the global wealth distribution, while India, Africa, and low-income Asian countries dominate the bottom third.
For all developing regions of the world, the share of population exceeds the share of global wealth, which in turn exceeds the share of members of the wealthiest groups.
A small number of countries account for most of the wealthiest 10% in the world. One quarter is Americans and another 20% are Japanese. These two countries feature even more strongly among the richest 1% of individuals in the world, with 37% residing in the USA and 27% in Japan.
According to Anthony Shorrocks, a country’s representation in the rich person’s club depends on three factors: the size of the population, average wealth, and wealth inequality.
‘The USA and Japan stand out’, he says, ‘because they have large populations and high average wealth. Although Switzerland and Luxembourg have high average wealth, their populations are small. China on the other hand fails to feature strongly among the super-rich because average wealth is modest and wealth is evenly spread by international standards. However, China is already likely to have more wealthy residents than our data reveals for the year 2000, and membership of the super-rich seems set to rise fast in the next decade.’
Composition of household wealth
The UNU-WIDER study shows major international differences in the composition of assets, resulting from different influences on household behavior such as market structure, regulation, and cultural preferences.
Real property, particularly land and farm assets, are more important in less developed countries. This reflects not only the greater importance of agriculture, but also immature financial institutions.
The study also reveals striking differences in the types of financial assets owned. Savings accounts feature strongly in transition economies and in some rich Asian countries, while share-holdings and other types of financial assets are more evident in rich countries in the West.
According to the authors of the UNU-WIDER study, savings accounts tend to be favored in Asian countries because ‘there appears to be a strong preference for liquidity and a lack of confidence in financial markets. Other types of financial assets are more prominent in countries like the UK and USA which have well developed financial sectors and which rely heavily on private pensions.’
Surprisingly, household debt is relatively unimportant in poor countries. As the authors of the study point out: ‘While many poor people in poor countries are in debt, their debts are relatively small in total. This is mainly due to the absence of financial institutions that allow households to incur large mortgage and consumer debts, as is increasingly the situation in rich countries’
The authors go on to note that ‘many people in high-income countries have negative net worth and—somewhat paradoxically—are among the poorest people in the world in terms of household wealth.’
The World Institute for Development Economics Research of the United Nations University (UNU-WIDER) was established in 1985. The institute undertakes multidisciplinary research and policy analysis on structural changes affecting the living conditions of the world’s poorest people; provides a forum for professional interaction and the advocacy of policies leading to robust, equitable, and environmentally sustainable growth; and promotes capacity strengthening and training for scholars and government officials in the field of economic and social policy making.
Distribution of World Wealth
The Global Peace Index that the BBC is referring to is an attempt to quantify the difficult-to-define value of peace and rank countries based on over 20 indicators using both quantitative data and qualitative scores from a range of sources.
Jorn Madslien, The purchasing power of peace, BBC, June 03, 2009
(The top ranking nations on the global peace index were New Zealand, Denmark, Norway, Iceland, Austria, Sweden, Japan, Canada, Finland, and Slovenia. It is worth looking at the report for the full list of indicators used, which cover a mixture of internal and external factors, weighed in various ways.)
How the world's wealth is distributed. The top two percent own half. A new study on The World Distribution of Household Wealth by the Helsinki-based. The UNU-WIDER study is the first of its kind to cover all countries in the world and all major components of household wealth, including financial assets and debts, land, buildings and other tangible property.
The concentration of wealth within countries varies significantly but is generally high. The share of the top 10% ranges from around 40% in China to 70% in the United States, and higher still in other countries. The Gini value, which measures inequality on a scale from zero to one, gives numbers in the range from 35% to 45% for income inequality in most countries. In contrast, Gini values for wealth inequality are usually between 65% and 75%, and sometimes exceed 80%. Two high wealth economies, Japan and the United States, show very different patterns of wealth inequality, with Japan having a wealth Gini of 55% and the USA a wealth Gini of around 80%.
Wealth inequality for the world as a whole is higher still. The study estimates that the global wealth Gini for adults is 89%. The same degree of inequality would be obtained if one person in a group of ten takes 99% of the total pie and the other nine shares the remaining 1%.
Where does the world’s wealthy live?
According to the study, almost all of the world’s richest individuals live in North America, Europe, and rich Asia-Pacific countries. Each of these groups of countries contribute about one third of the members of the world’s wealthiest 10%.
China occupies much of the middle third of the global wealth distribution, while India, Africa, and low-income Asian countries dominate the bottom third.
For all developing regions of the world, the share of population exceeds the share of global wealth, which in turn exceeds the share of members of the wealthiest groups.
A small number of countries account for most of the wealthiest 10% in the world. One quarter is Americans and another 20% are Japanese. These two countries feature even more strongly among the richest 1% of individuals in the world, with 37% residing in the USA and 27% in Japan.
According to Anthony Shorrocks, a country’s representation in the rich person’s club depends on three factors: the size of the population, average wealth, and wealth inequality.
‘The USA and Japan stand out’, he says, ‘because they have large populations and high average wealth. Although Switzerland and Luxembourg have high average wealth, their populations are small. China on the other hand fails to feature strongly among the super-rich because average wealth is modest and wealth is evenly spread by international standards. However, China is already likely to have more wealthy residents than our data reveals for the year 2000, and membership of the super-rich seems set to rise fast in the next decade.’
Composition of household wealth
The UNU-WIDER study shows major international differences in the composition of assets, resulting from different influences on household behavior such as market structure, regulation, and cultural preferences.
Real property, particularly land and farm assets, are more important in less developed countries. This reflects not only the greater importance of agriculture, but also immature financial institutions.
The study also reveals striking differences in the types of financial assets owned. Savings accounts feature strongly in transition economies and in some rich Asian countries, while share-holdings and other types of financial assets are more evident in rich countries in the West.
According to the authors of the UNU-WIDER study, savings accounts tend to be favored in Asian countries because ‘there appears to be a strong preference for liquidity and a lack of confidence in financial markets. Other types of financial assets are more prominent in countries like the UK and USA which have well developed financial sectors and which rely heavily on private pensions.’
Surprisingly, household debt is relatively unimportant in poor countries. As the authors of the study point out: ‘While many poor people in poor countries are in debt, their debts are relatively small in total. This is mainly due to the absence of financial institutions that allow households to incur large mortgage and consumer debts, as is increasingly the situation in rich countries’
The authors go on to note that ‘many people in high-income countries have negative net worth and—somewhat paradoxically—are among the poorest people in the world in terms of household wealth.’
The World Institute for Development Economics Research of the United Nations University (UNU-WIDER) was established in 1985. The institute undertakes multidisciplinary research and policy analysis on structural changes affecting the living conditions of the world’s poorest people; provides a forum for professional interaction and the advocacy of policies leading to robust, equitable, and environmentally sustainable growth; and promotes capacity strengthening and training for scholars and government officials in the field of economic and social policy making.
Distribution of World Wealth
The Global Peace Index that the BBC is referring to is an attempt to quantify the difficult-to-define value of peace and rank countries based on over 20 indicators using both quantitative data and qualitative scores from a range of sources.
Jorn Madslien, The purchasing power of peace, BBC, June 03, 2009
(The top ranking nations on the global peace index were New Zealand, Denmark, Norway, Iceland, Austria, Sweden, Japan, Canada, Finland, and Slovenia. It is worth looking at the report for the full list of indicators used, which cover a mixture of internal and external factors, weighed in various ways.)
How the world's wealth is distributed. The top two percent own half. A new study on The World Distribution of Household Wealth by the Helsinki-based. The UNU-WIDER study is the first of its kind to cover all countries in the world and all major components of household wealth, including financial assets and debts, land, buildings and other tangible property.
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