Household Wealth: First Estimates For The Whole World
01 Mar 2011
Research published in the March 2011 Economic Journal provides the first comprehensive estimates of the level and distribution of global household wealth, including financial assets, personal debts, land, buildings and other tangible property.
The study by James Davies, Susanna Sandstrom, Anthony Shorrocks and Edward Wolff reveals the high degree of wealth inequality at the turn of the millennium, both between and within countries – and considerably more unequal than the global distribution of income.
The research also finds major cross-country differences in the composition of household wealth. Real assets, particularly land and farm assets, are more important in less developed countries, reflecting the greater importance of agriculture, the immaturity of financial institutions and other factors such as inflation risk.
Striking differences are also evident in the types of financial assets owned. Savings accounts feature strongly in transition economies and some rich Asian countries, due to a preference for liquidity and a lack of confidence in financial markets. In contrast, shareholdings are more prominent in countries like the UK and United States, which have well-developed financial sectors and heavy reliance on private pensions.
The report''s figures for global household wealth are expressed in terms of the world adult population and relate to the year 2000 and to US dollar values converted using purchasing power parity (PPP) exchange rates. They show that:
- Mean global wealth was $44,000 in the year 2000 but the median value was much lower at $8,635, reflecting the high degree of wealth inequality.
- Overall, the richest 1% of adults owned 32% of global assets and the richest 10% accounted for 71%. In contrast, the bottom half of the wealth distribution held barely 3.7% of global wealth and the global Gini value, which measures inequality on a scale from zero (total equality) to one (one individual owns everything), was 0.802.
- The high level of global wealth inequality is due to both very large inter-country differences and very high wealth inequality within countries. The United States is the richest country in aggregate terms, with wealth of $201,000 per adult in the year 2000. In contrast, wealth per adult in India was $12,000.
- The study finds wealth to be more unequally distributed than income across countries. High-income countries tend to have a bigger share of world wealth than of world income. The reverse is true of middle- and low-income nations.
- Wealth concentration within countries varies significantly but is generally high. The share of the top 10% ranges from around 41% in China to 70% in the United States. The Gini value gives numbers in the range from 0.35 to 0.45 for income inequality in most countries but between 0.65 and 0.80 for wealth inequality.
- Net assets of $8,635 were sufficient to be in the top half of the world wealth distribution in the year 2000, but $89,600 was required to be among the richest 10% of adults and $518,000 was needed to belong to the top 1%.
- 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.
- On a country basis, one-quarter of the wealthiest 10% of adults are American 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 United States and 27% in Japan.
- China fails to feature strongly among the global top 1% in the year 2000 because average wealth was modest and wealth evenly spread by international standards. But Chinese membership of the 1% has risen fast in the subsequent years.
''The Level and Distribution of Global Household Wealth'' byJames Davies, Susanna Sandström, Anthony Shorrocks and Edward Wolff by is published in the March 2011 issue of the Economic Journal.
University of Western Ontario | +1-519-661-3529 | email@example.com
UNU-WIDER (United Nations University – World Institute for Development Economics Research). | +39-06-6513-3645 | Susanna.Sandstrom@wfp.org
UNU-WIDER (United Nations University – World Institute for Development Economics Research). | +44 (0)207-266-1535 | firstname.lastname@example.org
New York University | +1-212-998-8917 | email@example.com