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“The World Distribution of Household Wealth” Davies, Sandstrom, Shorrocks, and Wolff 2006

This report builds upon existing research on the world distribution of household wealth to show the large wealth gaps and inequalities between the global rich and the working poor.

The reports reviews global income distribution. The authors argue that the wealth gap has not decreased over time, but has in fact become much worse in some areas. Wealth is concentrated in North America, Europe, and high income Asia-Pacific areas such as Japan. Collectively these areas own nearly 90% of the world’s wealth. The report and accompanying power point slideshow contain excellent graphics.

The report disaggregates wealth into:

(i) non-financial assets

(ii) financial assets

(iii) liabilities

After separating wealth into these different categories, they ran regressions for each. They found that global household wealth in the year 2000 was $20,500 per person using official exchange rates and $26,000 when adjusted for country price levels. The average wealth per capita for varying countries was $144,000 in the United States, $181,000 in Japan, $1,400 in Indonesia, and $1,100 in India.

China occupies most of the middle-third of wealth and Africa, India, and low-income Asian countries such as Indonesia occupy the bottom third of wealth.

The figure above shows the distribution of global wealth across different regions and between rich and poor [on horizontal axis, decile 1 is poor & decile 10 is rich]. China occupies most of the middle-third of wealth and Africa, India, and low-income Asian countries such as Indonesia occupy the bottom third of wealth.

One goal for improvement that they strive for in looking at income distributions on the global perspective is that household balance sheets and wealth surveys need to be generated in more countries. They believe that information is completely lacking in Latin America, and almost completely absent in Africa and most of Asia as well. “Without the relevant data it is impossible to see what progress is being made.” (2006, p.34)

Davies, James B., Susanna Sandstrom, Anthony Shorrocks, and Edward N. Wolff (2006) “The World Distribution of Household Wealth” World Institute for Development Economics Research of the United nations University. Helsinki, Finland.

World Distribution of Household Wealth Powerpoint Presentation

World Distribution of Household Wealth Full Report

Summary by Ellen Liang