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Distribution of Wealth

On June 17th, 2012, Posted by Author No Comments

What is Distribution of Wealth?

distribution of wealth 1The Distribution of Wealth is an assessment of the wealth or assets owned by various members or groups in a society or in a country, in particular and the world, in general. Wealth is actually the net worth of a person and it is different from the income. In point of fact, wealth is essentially the assets or the elements possessing economic value that are owned by the individual or society and not the income.

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How is Distribution of Wealth analysed?

Usually mathematical tools such as the Pareto distribution are used to calculate the distribution of wealth because it is able to model the unequal distribution of wealth also. Distribution of wealth is calculated by calculating the cumulative assets owned by the individual or group after the liabilities incurred are deducted from this. Then the total assets of the group or country are calculated. The distribution of wealth in different groups or countries can then be compared and analysed using different methods. For instance, the distribution of wealth among the richest ten per cent of the population and the poorest ten per cent are compared. Or the regions with the largest wealth compared to those with the least. Also comparison of the distribution of Wealth among the countries with relation to their comparative populations can be made.

What is the Distribution of Wealth Pyramid?

distribution of wealth 2The distribution of wealth in a country, region or the world can be represented in the form of a pyramid with the wealth range and the population as the two factors. The distribution of wealth shown by this illustration from the Credit Suisse graphically represents the spread of wealth among the people of the world. The bottom-most section of the pyramid represents 67.6 per cent of the population whose wealth is less than ten thousand US dollars and the apex represents the top 0.5 per cent of the millionaires. Or, in other words, forty per cent of the world’s wealth is owned by just 0.5 per cent of the population. By observing the distribution of wealth from this pyramid, the inequalities of the distribution become very evident.

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