http://www.wider.unu.edu/research/2006-2007/2006-2007-1/wider-wdhw-launch-5-12-2006/wider-wdhw-press-release-5-12-2006.htm

Pioneering Study Shows Richest Two Percent Own Half World Wealth

The richest 2% of adults in the world own more than half of global household wealth according to a path-breaking study released today by the Helsinki-based World Institute for Development Economics Research of the United Nations University (UNU-WIDER).

The most comprehensive study of personal wealth ever undertaken also 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. In contrast, the bottom half of the world adult population owned barely 1% of global wealth.

The research finds that assets of $2,200 per adult placed a household in the top half of the world wealth distribution in the year 2000. To be among the richest 10% of adults in the world required $61,000 in assets, and more than $500,000 was needed to belong to the richest 1%, a group which — with 37 million members worldwide — is far from an exclusive club.

The UNU-WIDER study is the first of its kind to cover all countries in the world and all major components of household wealth, including financial assets and debts, land, buildings and other tangible property.

‘One should be clear about what is meant by “wealth”,' say co-authors James Davies of the University of Western Ontario, Anthony Shorrocks and Susanna Sandstrom of UNU-WIDER, and Edward Wolff of New York University. ‘In everyday conversation the term “wealth” often signifies little more than “money income”. On other occasions economists use “wealth” to refer to the value of all household resources, including human capabilities.'

‘We use the term in its long-established sense of net worth: the value of physical and financial assets less debts. In this respect, wealth represents the ownership of capital. Although capital is only one part of personal resources, it is widely believed to have a disproportionate impact on household wellbeing and economic success, and more broadly on economic development and growth.'

Wealth levels across countries

Using currency exchange rates, global household wealth amounted to $125 trillion in the year 2000, equivalent to roughly three times the value of total global production (GDP) or to $20,500 per person. Adjusting for differences in the cost-of-living across nations raises the value of wealth to $26,000 per capita when measured in terms of purchasing power parity dollars (PPP$).

The world map shows per capita wealth of different countries. (Figure 1: World Wealth Levels in Year 2000) Average wealth amounted to $144,000 per person in the USA in year 2000, and $181,000 in Japan. Lower down among countries with wealth data are India, with per capita assets of $1,100, and Indonesia with $1,400 per capita.

Per capita wealth levels vary widely across countries. Even within the group of high-income OECD nations the range includes $37,000 for New Zealand and $70,000 for Denmark and $127,000 for the UK.

Wealth is heavily concentrated in North America, Europe, and high income Asia-Pacific countries. People in these countries collectively hold almost 90% of total world wealth. (Figure 2: Regional Wealth Shares)

Although North America has only 6% of the world adult population, it accounts for 34% of household wealth. Europe and high income Asia-Pacific countries also own disproportionate amounts of wealth. In contrast, the overall share of wealth owned by people in Africa, China, India, and other lower income countries in Asia is considerably less than their population share, sometimes by a factor of more than ten. (Figure 3: Population and Wealth Shares by Region)

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 GDP. The reverse is true of middle- and low-income nations. However, there are exceptions to this rule, for example the Nordic region and transition countries like the Czech Republic and Poland.

The authors of the UNU-WIDER study explain that in Eastern European countries ‘private wealth is on the rise, but has still not reached very high levels. Assets like private pensions and life insurance are held by relatively few households. In the Nordic countries, the social security system provides generous public pensions that may depress wealth accumulation.'

World wealth inequality

The concentration of wealth within countries varies significantly but is generally high. The share of the top 10% ranges from around 40% in China to 70% in the United States, and higher still in other countries.

The Gini value, which measures inequality on a scale from zero to one, gives numbers in the range from 35% to 45% for income inequality in most countries. In contrast, Gini values for wealth inequality are usually between 65% and 75%, and sometimes exceed 80%.

Two high wealth economies, Japan and the United States, show very different patterns of wealth inequality, with Japan having a wealth Gini of 55% and the USA a wealth Gini of around 80%.

Wealth inequality for the world as a whole is higher still. The study estimates that the global wealth Gini for adults is 89%. The same degree of inequality would be obtained if one person in a group of ten takes 99% of the total pie and the other nine share the remaining 1%.

Where do the world’s wealthy live?

According to the study, 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%. (Figure 4: Regional Composition of Global Wealth Distribution)

China occupies much of the middle third of the global wealth distribution, while India, Africa, and low-income Asian countries dominate the bottom third.

For all developing regions of the world, the share of population exceeds the share of global wealth, which in turn exceeds the share of members of the wealthiest groups. (Figure 3: Population and Wealth Shares by Region)

A small number of countries account for most of the wealthiest 10% in the world. One-quarter are Americans and another 20% are Japanese. (Figure 5: Percentage Membership of Wealthiest 10%)

These two countries feature even more strongly among the richest 1% of individuals in the world, with 37% residing in the USA and 27% in Japan. (Figure 6: Percentage Membership of Wealthiest 1%)

According to Anthony Shorrocks, a country’s representation in the rich person’s club depends on three factors: the size of the population, average wealth, and wealth inequality.

‘The USA and Japan stand out’, he says, ‘because they have large populations and high average wealth. Although Switzerland and Luxembourg have high average wealth, their populations are small. China on the other hand fails to feature strongly among the super-rich because average wealth is modest and wealth is evenly spread by international standards. However, China is already likely to have more wealthy residents than our data reveals for the year 2000, and membership of the super-rich seems set to rise fast in the next decade.'

Composition of household wealth

The UNU-WIDER study shows major international differences in the composition of assets, resulting from different influences on household behaviour such as market structure, regulation, and cultural preferences.

Real property, particularly land and farm assets, are more important in less developed countries. (Figure 7: Asset Composition in Selected Countries) This reflects not only the greater importance of agriculture, but also immature financial institutions.

The study also reveals striking differences in the types of financial assets owned. Savings accounts feature strongly in transition economies and in some rich Asian countries, while share-holdings and other types of financial assets are more evident in rich countries in the West. (Figure 8: Composition of Financial Wealth in Selected Countries)

According to the authors of the UNU-WIDER study, savings accounts tend to be favoured in Asian countries because ‘there appears to be a strong preference for liquidity and a lack of confidence in financial markets. Other types of financial assets are more prominent in countries like the UK and USA which have well developed financial sectors and which rely heavily on private pensions.'

Surprisingly, household debt is relatively unimportant in poor countries. As the authors of the study point out: ‘While many poor people in poor countries are in debt, their debts are relatively small in total. This is mainly due to the absence of financial institutions that allow households to incur large mortgage and consumer debts, as is increasingly the situation in rich countries’

The authors go on to note that ‘many people in high-income countries have negative net worth and—somewhat paradoxically—are among the poorest people in the world in terms of household wealth.'

This is nothing new, is it?

http://www.usccb.org/cchd/povertyusa/tour.htm

Budgeting for Poverty

The federal government says a family of four earning $19,307 or less a year is living in poverty.

But how far does $19,307 go in America today?
How do you budget? What do you leave out?

You make the hard choices.

Housing? In America, a family of four earning less than $19,307 a year will spend on average $5,329 annually for the most basic of shelter.

$19,307 - 5,329 = 13,978

Utilities? To keep a family of four warm and secure, the average expense for utilities and public services runs $2,309 a year.

$13,978 - 2,309 = 11,669

Transportation? A family at the poverty line will spend $4,920 a year to own and maintain a used car, and fill it with the gas and oil needed to go to work, to day care, to the store, wherever.

$11,669 - 4,920 = 6,749

Food? Even with public assistance such as food stamps, families making less than $19,307 will spend $4,102 a year for food at home and away.

$6,749 - 4,102 = 2,647

Health Care? Even if an employer contributes part of the costs of health insurance, a family of four at the poverty line would still pay on average $2,132 year for health and medical expenses. The cost of not having health insurance, however, could be devastating.

$2,647 - 2,132 = 515

Child Care? The costs in a metropolitan-area child care center for two children five and under can reach over $13,000 a year. Even with child care subsidies, low income families with two small children will spend on average $2,300 a year on child care.

$515 - 2,300 = - 1,785

So now you’re $1,785 over budget, and you still don’t have everything ou need.

What do you leave out?
Toiletries, School Supplies, Shoes, Clothes, Holiday Gifts, Education, Life Insurance, Furnishings, Recreation, Cleaning Supplies, Entertainment, Birthday Gifts

These are the decisions that people are forced to make every day when they live in the state of poverty.

Visit http://www.povertyusa.org to learn more.

Source of Statistics:
Rent, utilities, transportation, food, health care: Consumer Expenditures Survey, U.S. Department of Labor, Bureau of Labor Statistics, June 2005;
Child care: Expenditures on Children by Families, United States Department of Agriculture, Center for Nutrition Policy and Promotion, April 2005
Poverty threshold: U.S. Census Bureau, Income, Poverty, and Health Insurance Coverage in the United States: 2004

Of course there is a wide gap in wealth across the globe, but I don't think these studies accurately consider cost of living. Somebody who is dirt poor in the US can take their earnings and live fairly well in almost any third-world country. There are still areas where bartering still takes place, effectively reducing the "wealth" of those people to at or near zero, when they do actually have the means to get by. If wealth is a function of only capital and other conrete investments, sure. But that is only really a relevant characteristic of currency-based economies.

Defending this system is as bad as defending feudalism. What surprise is there when the world economy is based on exploitation?

You forgot the " "

People in poverty in America are as a rule exploited?

all we have to do to get in on the action is go out and try to fuck one of their daughters

where's LW to tell us about how there is no poverty in America?

YESSSS!

You know what this means don't you? 99% of people need to work harder. You lazy fucks!

What part of the word "world" are you not understanding?

People in poverty in America are mostly ignored by the system.

I don’t think the world economy is based on exploitation. Sometimes people are exploited by their governments and corporations, but that's certainly not the norm. Unless you are one of those people who thinks all property is theft, then we are at an impasse in this discussion.

I think the wealth "inequality" gap is very interesting, but I have never seen it presented in a fair and balanced way. Without taking into consideration things like productivity, government regulation and social programs (mentioned in passing in the article), and IQ, it's hard to understand what the numbers really mean.

IMHO it's perfectly fair for the most productive and intelligent people to have the most wealth. I would hope that neurosurgeons make more money than burger flippers or rice farmers... how else will you attract the best people to those highly skilled positions?

I was hoping you would qualify your statement. Ya know, explain to us simple folk how poor people are systemically exploited. Not everyone can be as smart as you and have the definitive truth on the evils of capitalism.

I have a few questions about this link. Is this before or after taxes? If it's after, then we're probably looking at a gross pay of about somewhere around $22,450 ($19,307 / .86, accounting for the 14% payroll tax). Working 40 hours a week for 50 weeks, that's about $11.25 an hour.

But that's assuming that only one parent is working. Considering that they're factoring in child care into this equation, that would imply that both parents would be working. Divide $11.25 in half, and now you're looking at about $5.62 an hour. Awfully close to the current minimum wage.

It also bugs me that nearly every one of these studies uses a family of four as the example.

It's probably pre- tax, b/c that's what the US Census Bureau uses to determine poverty thresholds, and most of their references are US Census numbers.

That gets you down to $4.83 an hour.



Here are the thresholds for other size families, but I don't know how to figure out the average cost of housing, utilities, food, etc for different sized families.

1 $ 9,800
2 13,200
3 16,600
4 20,000
5 23,400
6 26,800
7 30,200
8 33,600
Beyond: for each additional person, add 3,400

I was thinking about this last night. I don't know about how well other folks managed money, but when I graduated college I was supporting only myself w/ no loans for around $25,000, and I still never felt like I had enough money. Sure, I was living a little better than I needed to, but I can't imagine what cuts I would have made trying to support 4 people on 19 grand. And 37 million US citizens are doing that right now.

And as LittleWing likes to point out, 36,999,999 of those people don't even know what poverty is when compared to other parts of the world.

It's enough to crush your spirit.

There isn't any. The few years I was on my own and doing the college thing, I lived well below the prescribed poverty line and did it just fine. For a number of years.

All that shit in that article B has, is just plain old BS. It takes into account a society that is completely excessive, makes an average, and extrapolates that into poverty.





When I left, I was living out of a 1400 square foot townhouse, and contributed...maybe a little more than three grand a year in rent for my share.

$2300 for utilities? WTF? Even in the dead of winter in WNY we were running my townhouse on less than a hundred a month. I guess we all neeeeeed AC and the house set at 70 in the wintertime?



I dunno about this one offhand. I was paying less than a hundred bucks a month for insurance. Did my own oil changes, and put maybe...$100 a month in gas TOPS! I don't know how they're taking these costs into effect. When I bought my new used car, even on my below poverty line wage, I had the savings to put a $3000 down payment on it, and make $118 a month payments after that.

Poor people don't own cars anyway.



Should have joined the military.



Shouldn't have had those kids when you weren't fucking ready to properly take care of them.

This is a losing argument for you guys. America has nothing more than a perception of poverty. Make up a number that encompasses a certain percentage of people, and call them poor. Completely disregard their assets, and look strictly at their earned income. Completely ignore what they take in off of government assistance at the same time as well.

I'm sorry, but there's no poverty in America. And those on the streets are there because of their own choices. Those that are percieved by Americans as poor are also generally in that position because of their own choices. A family of four making less than 20G's? Man, you have no business having a family if you are accomplishing so little for yourself in America.

They'll NEVER get any sympathy from me.

The poverty questionairre should look like this.

- Do you have adequate shelter that is safe from the weather?
- Do you have electricity to light your home and run a refrigerator?
- Can you heat your home?
- Do you have seven pairs of clothes?
- Do you have clean running water, a toilet, and a bath?
- Are you not hungry more than you're hungry?

Answer yes to all of the above? Good. You're not poor.

If that's the case, then I wonder why they are subtracting expenses straight from that number. If they accounted for taxes they could make their point look even stronger.

Also, where are you getting $4.83? I can see that's half of the wage from $19,307, but I'm not sure why you threw that out there.





I've probably earned on average about half of that since being out of college. Granted, I have a very complicated financial situation which might push it up overall to your number, but while I'm definitely far from rich, I've never felt seriously squeezed for money. Also, I've bought plenty of luxurious things like PJ trips, an iPod, premium beers, etc., that could easily have been cut off if I was stressed for cash. If I had a roommate, that would cut down expenses even more drastically.

I guess I'm just curious if the people that are being reflected here could do more themselves to get out of this definition of poverty.

One would be surprised how many fast food restaurants they have in the ghetto.