An individual who is considered wealthy, affluent, or rich is someone who has accumulated substantial wealth relative to others in their society or reference group. In economics, net worth refers to the value of assets owned minus the value of liabilities owed at a point in time. Wealth provides a type of individual safety net of protection against an unforeseen decline in one's living standard in the event of job loss or other emergency and can be transformed into home ownership, business ownership, or even a college education. Wealth has been defined as a collection of things limited in supply, transferable, and useful in satisfying human desires.
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When a desirable or valuable commodity transferable good or skill is abundantly available to everyone, the owner of the commodity will possess no potential for wealth. When a valuable or desirable commodity is in scarce supply, the owner of the commodity will possess great potential for wealth.
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A wealthy individual, community, or nation thus has more accumulated resources capital than a poor one. The opposite of wealth is destitution. The opposite of richness is poverty. The term implies a social contract on establishing and maintaining ownership in relation to such items which can be invoked with little or no effort and expense on the part of the owner. The concept of wealth is relative and not only varies between societies, but varies between different sections or regions in the same society.
However, such an amount would constitute an extraordinary amount of wealth in impoverished developing countries.
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Concepts of wealth also vary across time. Modern labor-saving inventions and the development of the sciences have vastly improved the standard of living in modern societies for even the poorest of people. This comparative wealth across time is also applicable to the future; given this trend of human advancement, it is possible that the standard of living that the wealthiest enjoy today will be considered impoverished by future generations. Industrialization emphasized the role of technology. Many jobs were automated. Machines replaced some workers while other workers became more specialized.
Labour specialization became critical to economic success.
However, physical capital , as it came to be known, consisting of both the natural capital and the infrastructural capital , became the focus of the analysis of wealth. Adam Smith saw wealth creation as the combination of materials, labour, land, and technology in such a way as to capture a profit excess above the cost of production. Marxian economics see labor theory of value distinguishes in the Grundrisse between material wealth and human wealth, defining human wealth as "wealth in human relations"; land and labour were the source of all material wealth.
Having a leading position in the development of rational sciences, in new technologies and in economic production leads to wealth, while the opposite can be correlated with poverty. Sir Francis Bacon. According to the eighth edition of the Global Wealth Report, in the year to mid, total global wealth rose at a rate of 6. This reflected widespread gains in equity markets matched by similar rises in non-financial assets, which moved above the pre-crisis year 's level for the first time this year.
Wealth growth also outpaced population growth, so that global mean wealth per adult grew by 4.
Tim Harford has asserted that a small child has greater wealth than the 2 billion poorest people in the world combined, since a small child has no debt. World's richest cities in In Western civilization, wealth is connected with a quantitative type of thought, invented in the ancient Greek "revolution of rationality", involving for instance the quantitative analysis of nature, the rationalization of warfare, and measurement in economics. In the Roman Empire, just as in modern colonialism, the main force behind the conquest of countries was the exploitation and accumulation of wealth in quantitative values like gold and money.
Der eigentliche Zweck alles Reichtums ist vergessen! The real purpose of all wealth has been forgotten! In economics , wealth in a commonly applied accounting sense, sometimes savings is the net worth of a person, household, or nation — that is, the value of all assets owned net of all liabilities owed at a point in time. For national wealth as measured in the national accounts , the net liabilities are those owed to the rest of the world.
Economic terminology distinguishes between wealth and income. Wealth or savings is a stock variable — that is, it is measurable at a date in time, for example the value of an orchard on December 31 minus debt owed on the orchard. For a given amount of wealth, say at the beginning of the year, income from that wealth, as measurable over say a year is a flow variable. What marks the income as a flow is its measurement per unit of time, such as the value of apples yielded from the orchard per year.
In macroeconomic theory the ' wealth effect ' may refer to the increase in aggregate consumption from an increase in national wealth.
One feature of its effect on economic behavior is the wealth elasticity of demand , which is the percentage change in the amount of consumption goods demanded for each one-percent change in wealth. Wealth may be measured in nominal or real values — that is, in money value as of a given date or adjusted to net out price changes. The assets include those that are tangible land and capital and financial money, bonds, etc. Measurable wealth typically excludes intangible or nonmarketable assets such as human capital and social capital.
In economics, 'wealth' corresponds to the accounting term ' net worth ', but is measured differently. Accounting measures net worth in terms of the historical cost of assets while economics measures wealth in terms of current values. But analysis may adapt typical accounting conventions for economic purposes in social accounting such as in national accounts.
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An example of the latter is generational accounting of social security systems to include the present value projected future outlays considered to be liabilities. Environmental assets are not usually counted in measuring wealth, in part due to the difficulty of valuation for a non-market good. Environmental or green accounting is a method of social accounting for formulating and deriving such measures on the argument that an educated valuation is superior to a value of zero as the implied valuation of environmental assets.
Social class is not identical to wealth, but the two concepts are related particularly in Marxist theory , leading to the combined concept of socioeconomic status. Wealth refers to value of everything a person or family owns. This includes tangible items such as jewelry, housing, cars, and other personal property. Financial assets such as stocks and bonds, which can be traded for cash, also contribute to wealth.
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Wealth is a restrictive agent for people of different classes because some hobbies can only be participated in by the affluent, such as world travel. Partly as a result of different economic conditions of life, members of different social classes often have different value systems and view the world in different ways. As such, there exist different "conceptions of social reality, different aspirations and hopes and fears, different conceptions of the desirable.
According to Richard H Ropers, the concentration of wealth in the United States is inequitably distributed. Cross-nationally, the United States has greater wealth inequality than other developed nations. Upper class encompasses the top end of the income spectrum relative members of society as a whole.
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Since they have more wealth and privacy, the upper class has more personal autonomy than the rest of the population. Upper class values include higher education, and for the wealthiest people the accumulation and maintenance of wealth, the maintenance of social networks and the power that accompanies such networks. Children of the upper class are typically schooled on how to manage this power and channel this privilege in different forms.
It is in large part by accessing various edifices of information, [ clarification needed ] associates, procedures and auspices that the upper class are able to maintain their wealth and pass it to future generations. The middle class encompasses individuals whose financial situation falls in between those of the upper and lower classes. Generally, the population of America associates themselves as middle class.
Lifestyle is a means for which individuals or families decide what to consume with their money and their way of living. The middle class places a greater emphasis on income: unlike the upper class, the middle class measures success and potential in the form of money rather than influence and power. The middle class views wealth as something for emergencies and it is seen as more of a cushion.
This class comprises people that were raised with families that typically owned their own home, planned ahead and stressed the importance of education and achievement. They earn a significant amount of income and also have significant amounts of consumption. However, there is very limited savings deferred consumption or investments, besides retirement pensions and home ownership. They have been socialized to accumulate wealth through structured, institutionalized arrangements. Without this set structure, asset accumulation would likely not occur. Those with the least amount of wealth are the poor.
Most of the institutions that the poor encounter discourage any accumulation of assets. This could lead to complications in solving their personal dilemmas, as predicted by the Class Structure Hypothesis. There are many societal standards and designs intentional sabotage and shortcomings to explain the persistent state of yearning and want the lower classes generally experience with their lower quality and quantity of assets.
Many individuals that are in the lower class stay in that class and very few move up in class. Many people in the lower class group believe there isn't such a thing as equal opportunity. In the western tradition, the concepts of owning land and accumulating wealth in the form of land were engendered in the rise of the first state , for a primary service and power of government was, and is to this day, the awarding and adjudication of land use rights.