The distribution of wealth is a comparison of the wealth of various members or groups in a society. It shows one aspect of economic inequality or economic heterogeneity.
The distribution of wealth differs from the income distribution in that it looks at the economic distribution of ownership of the assets in a society, rather than the current income of members of that society. According to the International Association for Research in Income and Wealth, "the world distribution of wealth is much more unequal than that of income."
For rankings regarding wealth, see List of sovereign states by wealth inequality or list of countries by wealth per adult.
Definition of wealth
Wealth of an individual is defined as net worth, expressed as: wealth = assets − liabilities
A broader definition of wealth, which is rarely used in measuring wealth inequality, also includes human capital. For example, the United Nations definition of inclusive wealth is a monetary measure which includes the sum of natural, human, and physical assets.
The relation between wealth, income, and expenses is: change of wealth = saving = income − consumption (expenses). If an individual has a large income but also large expenses, the net effect of that income on their wealth could be small or even negative.
Conceptual framework
There are many ways to analyze the distribution of wealth. One commonly used example is to compare an individual's wealth at the 99th percentile to the median (50th) percentile. This is P99/P50, one of the potential Kuznets ratios, which follows an inverted-U shape, indicating the relationship between inequality and income per capita. Another common measure is the ratio of the total wealth held by the top, say, 1% of the wealth distribution, to the total wealth in the economy. In many societies, the richest ten percent control more than half of the total wealth.
The Pareto Distribution has often been used to mathematically quantify the distribution of wealth at the right tail (the wealth of the very rich); stating that the upper 20% owns 80%, the upper 4% owns 64%, the upper 0.8% owns 51.2%, etc. In fact, the tail of wealth distributions, similar to that of income distribution, behaves like a Pareto distribution but with a thicker tail.
Wealth over people (WOP) curves are a visually compelling way to show the distribution of wealth in a nation. WOP curves are modified distribution-of-wealth curves. The vertical and horizontal scales each show percentages from 0 to 100. We imagine all the households in a nation being sorted from richest to poorest. They are then shrunk down and lined up (richest at the left) along the horizontal scale. For any particular household, its point on the curve represents how its wealth compares (as a proportion) to the average wealth of the richest percentile. For any nation, the average wealth of the richest 1/100 of households is the topmost point on the curve (people, 1%; wealth, 100%) or (p=1, w=100) or (1, 100). In the real world, two points on the WOP curve are always known before any statistics are gathered. These are the topmost point (1, 100) by definition, and the rightmost point (poorest people, lowest wealth) or (p=100, w=0) or (100, 0). This unfortunate rightmost point is given because there is always at least one percent of households (incarcerated, long-term illness, etc.) with no wealth at all. Given that the topmost and rightmost points are fixed ... our interest lies in the form of the WOP curve between them. There are two extreme possible forms of the curve. The first is the "perfect communist" WOP. It is a straight line from the leftmost (maximum-wealth) point, horizontally across the people scale, to p=99. Then it drops vertically to wealth = 0 at (p=100, w=0).
The other extreme is the "perfect tyranny" form. It starts on the left at the tyrant's maximum wealth of 100%. It then immediately drops to zero at p=2 and remains zero horizontally across the rest of the people. That is, the tyrant and his friends (the top percentile) own all the nation's wealth. All other citizens are serfs or enslaved people. An obvious intermediate form is a straight line connecting the left/top point to the right/bottom point. In such a "Diagonal" society, a household in the richest percentile would have just twice the wealth of a family in the median (50th) percentile. Such a society is compelling to many (especially people with low incomes). In fact, it is a comparison to a diagonal society, which is the basis for the Gini values used to measure disequity in a particular economy. These Gini values (40.8 in 2007) indicate that the United States is the third most inequitable economy among developed nations (behind Denmark and Switzerland).
More sophisticated models have also been proposed.
Theoretical approaches To model aspects of the distribution and holdings of wealth, many different theories have been used. Before the 1960s, data on this were collected mostly from wealth and estate tax records, with additional evidence gathered from small, unrepresentative examinations and other sources. The results from these sources tended to show that the distribution of wealth was highly unequal. That material inheritance played a major role in wealth differences and in the transmission of wealth status from generation to generation. There was also reason to believe that wealth inequality was shrinking over time, and the distribution's shape exhibited statistical regularities that could not have arisen by chance. Thus, early theoretical work on the distribution of wealth sought to explain statistical regularities and to comprehend the relationships among basic forces that could explain the high concentration of wealth and its declining trend over time. John Maynard Keynes explored the impact of monetary policy on wealth distribution in A Tract on Monetary Reform.
More lately, the research about wealth distribution has moved away from the worry with overall distributional characteristics, and in its place focuses more on the grounds of individual differences in the holdings of wealth. This change was caused partly because the importance of saving for retirement increased, and it is reflected in the vital role now assigned to the model of lifecycle savings developed by Modigliani and Brumberg (1954), and Ando and Modigliani (1963). Another important progress has been the increase in availability and finesse in sets of microdata, which offer not just estimations of individuals' asset holdings and savings but also a variety of other household and personal characteristics that can assist in explaining the differences in wealth.
Wealth inequality
Wealth inequality refers to the uneven distribution of wealth among individuals and entities. Although most research depends on written sources, archaeologists and anthropologists often view large houses as occupied by wealthy households. The distribution of contemporaneous house sizes in a society (perhaps analyzed using the Gini coefficient) then can be regarded as a measure of wealth inequality. This approach has been used at least since 2014 and has shown, for example, that ancient wealth disparities in Eurasia were greater than those in North America and in Mesoamerica following the earliest Neolithic period.
Global inequality statistics A study by the World Institute for Development Economics Research at United Nations University reports that the richest 1% of adults alone owned 40% of global assets in the year 2000, and that the richest 10% of adults accounted for 85% of the world total. The bottom half of the world's adult population owned 1% of global wealth.The World Distribution of Household Wealth. James B. Davies, Susanna Sandstrom, Anthony Shorrocks, and Edward N. Wolff. December 5, 2006. A 2006 study found that the richest 2% own more than half of global household assets.The rich really do own the world December 5, 2006 The Pareto distribution gives 52.8% owned by the upper 1%.
According to the OECD in 2012, the top 0.6% of the world's population (consisting of adults with more than US$1 million in assets) or the 42 million richest people in the world held 39.3% of world wealth. The next 4.4% (311 million people) held 32.3% of world wealth. The bottom 95% held 28.4% of world wealth. The large gaps in the report are reflected in the Gini index of 0.893, which is higher than the global income inequality gap measured in 2009 at 0.38. For example, in 2012 the bottom 60% of the world population held the same wealth in 2012 as the people on Forbes' Richest list consisting of 1,226 richest billionaires of the world.
A 2021 Oxfam report found that collectively, the 10 richest men in the world owned more than the combined wealth of the bottom 3.1 billion people, almost half of the entire world population. Their combined wealth doubled during the pandemic.
'Global Wealth Report 2021', published by Credit Suisse, shows a substantial worldwide increase in wealth inequality during 2020. According to Credit Suisse, the wealth distribution pyramid in 2020 shows that the richest group of the adult population (1.1%) owns 45.8% of the total wealth. Compared with the 2013 wealth distribution pyramid, an overall increase of 4.8% is evident. The bottom half of the world's total adult population, the bottom quartile in the pyramid, owns only 1.3% of the total wealth. Again, compared with the 2013 wealth distribution pyramid, there is a 1.7% decrease. In conclusion, this comparison shows a substantial worldwide increase in wealth inequality over these years.
One of the main explanations for the ongoing increase in wealth inequality is the repercussions of the COVID-19 pandemic. Credit Suisse claims that the economic impact of the pandemic on employment and incomes in 2020 is likely to negatively affect the lowest groups of wealth holders, forcing them to draw more from their savings or take on higher debt. On the other hand, the top wealth groups appeared to be relatively unaffected by this negative trend. Moreover, they seemed to benefit from the lower interest rates' impact on share and house prices.
According to the 'Global Wealth Report 2021' published by Credit Suisse, there were 56 million millionaires in the world in 2020, increasing by 5.2 million from a year earlier. The biggest number of dollar millionaires is reported in the USA, with 22 million millionaires (approximately 39% of the world total). This is far ahead of China, which holds second place with 9.4% of all global millionaires. The third place is currently being held by Japan, with 6.6% of all global millionaires.
The World Inequality Report 2026 stated that the wealthiest 0.001% alone—fewer than 60,000 individuals—control three times more wealth than half of humanity combined.
Real estate
While sizable numbers of households own no land, few have no income. For example, the top 10% of land owners (all corporations) in Baltimore, Maryland own 58% of the taxable land value. The bottom 10% of those who own any land own less than 1% of the total land value.Kromkowski, "Who owns Baltimore", CSE/HGFA, 2007. This form of analysis as well as Gini coefficient analysis has been used to support land value taxation.
Wealth distribution pyramid