ISSUE 44: DECEMBER 2006-FEBRUARY 2007
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Richest 2% own half the world's wealth – study
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 UNU World Institute for Development Economics Research (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.
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 $20,500 per person. Adjusting for differences in the cost-of-living across nations raises the value of wealth to $26,000 per capita when measured in terms of purchasing power parity dollars (PPP$).
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. Wealth levels vary widely across countries. Even within the group of high-income OECD nations the amounts range from $37,000 per person for New Zealand and $70,000 for Denmark to $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. 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 10.
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. Wealth inequality for the world as a whole is higher still.
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%.
A small number of countries account for most of the wealthiest 10% in the world. One-quarter are Americans and another 20% are Japanese. 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.
According to UNU-WIDER director Anthony Shorrocks, one of the authors of the study, 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."
© 2006 United Nations University