Wealth
- Wealth is a stock of assets that have a financial value
- There is marketable wealth and non-marketable wealth
- The former is wealth that can be transferred to another person, e.g. a house or shares
- The latter is specific to a person and cannot be transferred, e.g. pension rights.
- The distribution of wealth can be considered in terms of:
- How it’s distributed amongst the population (size distribution)
- The forms in which it is held
- The characteristics of those holding wealth
The Size Distribution of Wealth
- Wealth is very unevenly distributed amongst the UK’s population
Wealth Distribution Between Assets
- Wealth can be held in forms such as life insurance, pension funds, shares, etc.
- Some forms of wealth, such as life insurance and pension funds are more evenly distributed than things like shares and land
Wealth Distribution Between Different Groups
- People can become wealthy through inheritance, saving, and using their entrepreneurial skills
- Wealth is unevenly distributed between age categories, but it is to be expected; people in their 40s and 50s have had more time to accumulate savings than younger people, and so have greater wealth
- Wealth also varies between ethnic groups; men have more wealth than women, etc.
Causes of Wealth Inequality
- Inequality of income
- Work overtook inheritance as a source of wealth in the UK
- Having a high income makes it easier for people to save, and so gain higher interest rates on their savings.
- Differences in entrepreneurial skills
- Some people are self-made millionaires as a result of building up a business
- The pattern of inheritance
- In the UK, wealth has traditionally passed down to the eldest son, and hence kept wealth in the hands of the few
- In other countries where the property and other assets are distributed amongst the children, wealth is more evenly distributed over time.
- Marriage patterns of the wealthy
- The wealthy tend to marry other wealthy people, and this further concentrates wealth in the hands of the few.