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What Is the Distribution of Wealth?

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  • Written By: Anna B. Smith
  • Edited By: Michelle Arevalo
  • Last Modified Date: 23 July 2014
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The distribution of wealth is the study of how financial prosperity is spread across the population of a particular country. This calculation shows in which portions of the general population it is concentrated. Wealth is typically assessed in terms of marketable assets or financial holdings. Both of these are usually counted according to individual households or families within the population.

Marketable assets are a person's or family's total property, which can include real estate, financial investments, and monetary savings. Existing debt is then subtracted from this sum to generate actual affluence. This measurement is the most preferred by economists when considering the distribution of wealth.

Income is not included in the calculation of marketable assets when determining the distribution of wealth. This is defined as any money earned by the family in the form of wages, dividends on financial investments, and rent received from owned properties. Families that own a large amount of property may not have an equally high income. Personal property does not guarantee that it will produce residual income. Generally, however, high incomes are concentrated in the areas of society that also possess large amounts of wealth.

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Financial wealth is defined as a family’s net worth minus the monetary value of its home. This measurement is calculated when considering the distribution of wealth based on the theory that personal real estate is not easily made liquid. Homes typically take a lengthy amount of time to sell in comparison to the ready availability of cash. Generally, the distribution of wealth for a country is calculated in both terms, as marketable assets and financial wealth, to yield two different statistics.

When wealth distributions from countries around the world are compared, they usually demonstrate one consistent trend. They illustrate that, regardless of location, a relatively small amount of society typically owns the majority of the wealth in a nation. In the United States, for example — when wealth is viewed in terms of marketable assets — statistics show that the top 20% of prosperous families also own more than 80% of the total calculated wealth. This means that the remaining 80% of the population owns less than 20% of the country’s wealth.

Many countries seek to bring equality to the distribution of wealth so that there is less disparity between the rich portion of the population and the poor. This may be attempted through a variety of means, such as government regulation and social movements. Countries that have a high volume of money moving through their economies often have a greater level of equality in their distribution of wealth than those countries with a lower volume of money.

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