Wealth is the money a person receives, usually through wages or salaries.

But why is there so much focus on wealth inequality – and what’s the difference between that and income inequality?

Personal wealth means a stock of valuable possessions: anything from cash under your mattress, through shares and bonds, to the value of your house or your car. Income, on the other hand, is a flow of money you receive, such as wages for employment.

Here in the UK, we’ve heard talk that inequality hasn’t increased since before the financial crisis. Claims like that refer to income inequality. In July 2017, the Institute for Fiscal Studies (IFS) caused a stir with a report showing that the gap between the highest wages and the lowest has not changed much since 2008.

Statistics on income inequality risk misinterpretation. Although it has fallen by some measures, that doesn’t mean that those at the bottom are doing any better. In fact, as the Resolution Foundation revealed in a report for the Social Mobility Commission today, people on low pay are increasingly finding themselves stuck there, unable to ‘escape’ to better employment. The results in the IFS report are due mostly to salaries in the financial and insurance services sector, which are among the highest, falling dramatically after the crash; it also showed that those same salaries have been climbing faster over the past couple of years.

Wealth inequality is much more severe than income inequality. A tiny fraction of the population owns most of the UK’s pile of riches. In our recent work, we found that, between 2006-8 and 2012-14, the richest fifth of households gained almost 200 times as much in absolute wealth terms compared to the poorest fifth.

So, irrespective of the story on incomes, Britain is becoming much more unequal. Once we consider the consequences of wealth inequality, there’s much more cause for concern.

In the first place, wealth is itself a source of income. Holding stocks and shares on financial markets guarantees a source of income in the forms of dividends and capital gains; holding bonds or savings generates interest. The effect goes further: wealth allows people to purchase better healthcare and education, and assets like a house or a car themselves enable people to save time and take on better jobs (this article over at Quartz has a great summary of this point). Income can be stored as wealth, but wealth begets income.

This means that wealth is stockpiled by the rich and inequality gets worse over time, as Thomas Piketty’s groundbreaking book Capital in the 21st Century outlined with painstaking historical clarity. Since the return on capital (wealth) is higher than the rate of economic growth in general, wealth comes to dominate wages as the determinant of how prosperity is shared.

As the authors at IPPR point out, these facts have a necessary intergenerational bite to them. ‘Every generation since the ‘baby boomers’ now has less wealth than the generation before them had at the same age.’ With policies like exemptions for inheritance tax and the crushing weight of the housing market bearing down on young people, wealth inequality doesn’t only reinforce itself within the same cohort – it can multiply to appalling levels from one generation to the next.

Conservative politicians tearing their hair out over attracting younger voters would do well to take a long, hard look at wealth inequality statistics. Income inequality threatens to deteriorate. But the real news is in wealth and the patent unfairness associated with it.

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Alternate titles: wealth, distribution of

By The Editors of Encyclopaedia Britannica Article History

Key People:David Ricardo Vilfredo Pareto...(Show more)Related Topics:distribution theory income inequality subsidy standard of living Gini coefficient...(Show more)

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distribution of wealth and income, the way in which the wealth and income of a nation are divided among its population, or the way in which the wealth and income of the world are divided among nations. Such patterns of distribution are discerned and studied by various statistical means, all of which are based on data of varying degrees of reliability.

Wealth is an accumulated store of possessions and financial claims. It may be given a monetary value if prices can be determined for each of the possessions; this process can be difficult when the possessions are such that they are not likely to be offered for sale. Income is a net total of the flow of payments received in a given time period. Some countries collect statistics on wealth from legally required evaluations of the estates of deceased persons, which may or may not be indicative of what is possessed by the living. In many countries, annual tax statements that measure income provide more or less reliable information. Differences in definitions of income—whether, for example, income should include payments that are transfers rather than the result of productive activity, or capital gains or losses that change the value of an individual’s wealth—make comparisons difficult.

What Is the FIRE Movement and Is It for You?

Britannica Money What Is the FIRE Movement and Is It for You?

In order to classify patterns of national wealth and income, a basis of classification must be determined. One classification system categorizes wealth and income on the basis of the ownership of factors of production: labour, land, capital, and, occasionally, entrepreneurship, whose respective forms of income are labeled wages, rent, interest, and profit. Personal distribution statistics, usually developed from tax reports, categorize wealth and income on a per capita basis.

Gross national income (GNI) per capita provides a rough measure of annual national income per person in different countries. Countries that have a sizable modern industrial sector have a much higher GNI per capita than countries that are less developed. In the early 21st century, for example, the World Bank estimated that the per-capita GNI was approximately $10,000 and above for the most-developed countries but was less than $825 for the least-developed countries. Income also varies greatly within countries. In a high-income country such as the United States, there is considerable variation among industries, regions, rural and urban areas, females and males, and ethnic groups. While the bulk of the U.S. population has a middle income that is derived largely from earnings, wages vary considerably depending on occupation. (See also gross national product, gross domestic product.)

A significant proportion of an economy’s higher incomes will derive from investment rather than earnings. It is often the case that the higher the income, the higher the investment-derived portion tends to be. Because most fortunes require long periods to accumulate, the existence of a class of very wealthy persons can result from the ability of those persons to retain their fortunes and pass them on to descendants. Earned incomes are influenced by a different kind of inheritance. Access to well-paid jobs and social status is largely the product of education and opportunity. Typically, therefore, well-educated children of wealthier parents tend to retain their parents’ status and earning power. A dynamic economy, however, increases the likelihood of attaining wealth and status through individual effort alone.

What is wealth quizlet sociology?

Wealth is a family's or individual's net wroth(total assests minus total debts. It's everything you won minus debts such as mortagaes on homes, credit card debts, and student loan debts. Income is a stream or river of money flowing through family's handds.

What is the difference between money income and wealth quizlet?

Income is the money (annual earnings) that you make at your job, while wealth is what you own. Wealth is your net worth that includes the value of all of your assets minus your financial liabilities.

Which of the following best explains the relationship between wealth and income quizlet?

Which of the following best explains the relationship between wealth and income? The same factors that limit people's incomes also limit their ability to accumulate wealth.

Which of the following refers to a person's wealth power and prestige ranking in society?

Social stratification refers to a society's categorization of its people into rankings based on factors like wealth, income, education, family background, and power.