Wealth in sentence

3143 examples of Wealth in a sentence

So there is more going on here, but I'm not going to talk too much about this today, because I want to focus on wealth inequality.

Now, the second fact is more about wealth inequality, and here the central fact is that wealth inequality is always a lot higher than income inequality, and also that wealth inequality, although it has also increased in recent decades, is still less extreme today than what it was a century ago, although the total quantity of wealth relative to income has now recovered from the very large shocks caused by World War I, the Great Depression, World War II.

So first, if you look at the level of wealth inequality, this is the share of total wealth going to the top 10 percent of wealth holders, so you can see the same kind of reversal between the U.S. and Europe that we had before for income inequality.

So wealth concentration was higher in Europe than in the U.S. a century ago, and now it is the opposite.

But you can also show two things: First, the general level of wealth inequality is always higher than income inequality.

So remember, for income inequality, the share going to the top 10 percent was between 30 and 50 percent of total income, whereas for wealth, the share is always between 60 and 90 percent.

Fact number two is that the rise in wealth inequality in recent decades is still not enough to get us back to 1910.

So the big difference today, wealth inequality is still very large, with 60, 70 percent of total wealth for the top 10, but the good news is that it's actually better than one century ago, where you had 90 percent in Europe going to the top 10.

So today what you have is what I call the middle 40 percent, the people who are not in the top 10 and who are not in the bottom 50, and what you can view as the wealth middle class that owns 20 to 30 percent of total wealth, national wealth, whereas they used to be poor, a century ago, when there was basically no wealth middle class.

So this is an important change, and it's interesting to see that wealth inequality has not fully recovered to pre-World War I levels, although the total quantity of wealth has recovered.

So this is the total value of wealth relative to income, and you can see that in particular in Europe, we are almost back to the pre-World War I level.

One has to do with the total quantity of wealth that we accumulate, and there is nothing bad per se, of course, in accumulating a lot of wealth, and in particular if it is more diffuse and less concentrated.

So what we really want to focus on is the long-run evolution of wealth inequality, and what's going to happen in the future.

How can we account for the fact that until World War I, wealth inequality was so high and, if anything, was rising to even higher levels, and how can we think about the future?

Let me first say that probably the best model to explain why wealth is so much more concentrated than income is a dynamic, dynastic model where individuals have a long horizon and accumulate wealth for all sorts of reasons.

If people were accumulating wealth only for life cycle reasons, you know, to be able to consume when they are old, then the level of wealth inequality should be more or less in line with the level of income inequality.

But it will be very difficult to explain why you have so much more wealth inequality than income inequality with a pure life cycle model, so you need a story where people also care about wealth accumulation for other reasons.

So typically, they want to transmit wealth to the next generation, to their children, or sometimes they want to accumulate wealth because of the prestige, the power that goes with wealth.

So there must be other reasons for accumulating wealth than just life cycle to explain what we see in the data.

Now, in a large class of dynamic models of wealth accumulation with such dynastic motive for accumulating wealth, you will have all sorts of random, multiplicative shocks.

So for instance, some families have a very large number of children, so the wealth will be divided.

So you will always have some mobility in the wealth process.

The important point is that, in any such model, for a given variance of such shocks, the equilibrium level of wealth inequality will be a steeply rising function of r minus g.

And intuitively, the reason why the difference between the rate of return to wealth and the growth rate is important is that initial wealth inequalities will be amplified at a faster pace with a bigger r minus g.

So take a simple example, with r equals five percent and g equals one percent, wealth holders only need to reinvest one fifth of their capital income to ensure that their wealth rises as fast as the size of the economy.

So of course some families will consume more than that, some will consume less, so there will be some mobility in the distribution, but on average, they only need to reinvest one fifth, so this allows high wealth inequalities to be sustained.

And in a way, this was the very foundation of society, because r bigger than g was what allowed holders of wealth and assets to live off their capital income and to do something else in life than just to care about their own survival.

First, a very low rate of return due to the 1914 and 1945 war shocks, destruction of wealth, inflation, bankruptcy during the Great Depression, and all of this reduced the private rate of return to wealth to unusually low levels between 1914 and 1945.

Just to give you one example, this comes from the Forbes billionaire rankings over the 1987-2013 period, and you can see the very top wealth holders have been going up at six, seven percent per year in real terms above inflation, whereas average income in the world, average wealth in the world, have increased at only two percent per year.

We know too little about global wealth dynamics, so we need international transmission of bank information.

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