Questions tagged [wealth]

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Wealth in the utility function

Suppose there is a representative household of unit mass who lives forever. Preferences are given as: $$\sum\beta^tu(c_t,k_{t-1})$$ Technology is given as: $$k_{t+1}=AF(K_t,L_t)+(1-\delta)K_t-c_t$$ ...
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Is There an rNPV Model Relating Money Supply, Total Wealth and Money Velocity?

It seems sensible that the supply of constant-value units of fiat money should roughly correspond to the total wealth of the jurisdiction's economy, in the same sense that an on-demand gold ...
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2 votes
1 answer
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Why isn't economic growth defined in terms of the increase in national wealth?

Economic growth is defined as the increase in production or output per unit time. Why isn't it instead defined in terms of the increase in national wealth?
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Why do we need to borrow?

(I have super limited knowledge with economics/finance/etc so please forgive me for any misunderstandings or misrepresentations.) Why do we need debt? People who make profit by lending to others don't ...
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Would be there redistribution of wealth from actors with sticky prices to actors with more flexible prices under stagflation?

Suppose there is inflation in our country, but we take a short term, thus some prices are sticky and there is non-positive "growth" of the real GDP. In other words, we experience stagflation....
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Is it viable to put a cap on personal wealth in the U.S.?

Setting a cap on personal wealth is a proposal that has been championed by several progressive politicians in the U.S. (Sanders, Ocasio-Cortez, etc.). From what I understand, they argue that by ...
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-1 votes
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What are some reasons why CEOs make 200-1000x as much as post PhD researchers?

Even the most monetarily effective Post PhD Researchers make at most a couple of million dollars over the course of their careers, whereas CEOs can earn over 1000x more over the course of theirs even ...
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How did Pareto came up with Pareto Distribution of wealth law?

I am not an economist but a mathematics student. I heard about the Pareto law - the mathematical modelling of the distribution of wealth, how did Pareto come up with this law? technically speaking ...
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How did the authors of the (Credit Suisse) Global Wealth Databook calculate the Gini coefficient?

how are you doing? I read the Global Wealth Reports from Credit Suisse and I wondered how the authors calculated the Gini coefficient. For example, on page 84 of this databook from 2010, how did they ...
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Lorenz curve extension to 3d?

While thinking about Lorenz curves and economic inequality I wondered if you can extend Lorenz curves to Lorenz surfaces by revolving a Lorenz curve about the line of perfect equality. Would such a ...
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Would a fair distribution of wealth from the super rich increase the purchasing power/life quality of the average person?

I will start by saying that I do not have any background in finance and that the following question might be very much naive, but it has been bugging me for a while now. The general narrative seems to ...
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Does a more even distribution of wealth result in lower taxation?

A proportion of government spending is associated with welfare. There are also many factors related to poverty that may result in higher government spending (e.g. poor health, crime, etc.). Does it ...
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Does the concept of Capitalism increase the net wealth?

I am currently going through a video by Peter Schiff from the occupy Wallstreet period where he is talking with the protestors at the time. I'm pretty early in the video and Mr. Schiff makes the ...
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How does John Stuart Mill distinguish between "wealth" and "riches"?

JS Mill in his Principles (1848): But though air is not wealth, mankind are much richer by obtaining it gratis, since the time and labour which would otherwise be required for supplying the most ...
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If we estimated the value of all the assets in the world and compared it with the estimated total wealth of individuals, would the results be similar?

Say we estimated the value of all assets (money, stocks, bonds, property, etc.) in the world. Next we estimate the wealth of all the individuals in the world. Would the two resulting values be ...
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2 votes
3 answers
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Bananas and oranges in communist countries

This is a question I wanted to ask for a long time. If you check the GDP or East Germany in 1989 and compare it to that of banana-producing countries you can see: ...
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2 votes
2 answers
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Do rich people on average have the vast majority of their wealth invested or they have lots of liquid cash/no productive properties?

I often read about really rich people with billions of dollars, and I'd like to know if they have, for example, just a big part of their wealth in shares of their company or they have lots of wealth ...
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Where is the split in the wealth gap? [closed]

I've been curious where the split in the wealth gap has been over time, and if it was possible to graph it. Put another way, at what net worth is the number of those worth more shrinking in ...
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Income/Wealth Inequality; Why does it matter?

I have attempted to answer this question on my own through reading books, blog, and other economic pieces of literature but they all fail to articulate why wealth or income disparities matter. Now ...
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2 votes
1 answer
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Pareto distribution and Lorenz curve

I am currently studying Pareto distributions and their relation to Lorenz curves but I am having a hard time understanding the concept. If I am understanding correctly, Lorenz curve describes the ...
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Why do the gross return of wealth and wealth move in opposite direction?

I have a short question: Why does the gross return of wealth decrease as wealth increases? Why do the gross return of wealth and wealth move in opposite direction? $$R=1+(a/w^2)$$ where a is non-...
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Are there any effective research efforts into combating wealth inequality?

There seems to be no "correct" answer in combating wealth inequality; however, we should attempt to use different methods to combat inequality in cities, then counties, then states, then countries. ...
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Is a 6% wealth tax a sustainable source of income?

Elizabeth Warren is planning to pay for various things with a 6% wealth tax on those with fortunes in excess of $1B USD. Now, right or wrong, this seems to be an awfully big annual scoop from a ...
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Data for income distributions

Knowing the average income per capita or the median income is a rather poor economical indicator of a country, even when given in PPP\$. Knowing the (dimension-less) Gini index is somehow better, but ...
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1 vote
3 answers
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How long can I live in the United States with my German monthly income?

I see different (more or less abstract resp. specific) approaches to compare wealth (of individuals, regions, and countries): by living standards by living expenses by incomes/salaries by purchasing ...
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How does the pie get larger?

I understand the concept of creation of wealth through trade, innovation, labor and capital. New value is being added to the economy. Let's imagine for a second that there are no central banks and the ...
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What is the difference between a power law exponent and the Pareto exponent?

I use the poweRlaw package in R to fit a power law to my data. I am trying to figure out what is the value of the Pareto exponent. Assume the probability mass function is defined by: $$ p(x) = \...
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Social mobility and income inequality

I once read an argument by the libertarian economist Thomas Sowell against the conventional wisdom that rising income is bad because most statistics which show rising income inequality do not account ...
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Assumption of sufficient wealth in quasi-linear preferences

Whenever we talk about quasi-linear preferences, we assume that the consumer is sufficiently wealthy. As far as I understand is that we need that assumption in order to obtain an interior solution. ...
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4 votes
3 answers
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Is poverty a mathematical necessity?

I recently saw a meme, and the content was something like: In the near future, a meteor will 'hit' the Earth, and there will be gold rain, and hence everyone will be rich The ridiculous thing ...
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Question about the effect on economic productivity due to a hypothetical wealth distribution requirement

Assume a sovereign state that functions like a joint stock corporation does: it will be comprised of shareholders and its "stateshares" will have a market value since they are tradeable. Now assume ...
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What's the difference between equity capital and market capitalization?

Is there any difference between the equity capital and the market capitalization of a company (or a bank)? If yes then what's the difference?
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What's the combined wealth of the US banks?

How much is the amount of money of the US banks? In terms of: assets their own money (the banks make profits and they can keep the profits for further investments) The question is only about the ...
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2 votes
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Is there a term for the personal wealth that is not used to generate income?

A rich person can own companies, shares, houses used for renting etc. that are worth billions of $US. That is the wealth that is generating income. I would call it income-generating wealth or income+...
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3 votes
2 answers
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Statistical distribution of wages and wealth

How are wages distributed globally? Wages do not follow a normal distribution, do they? Is wealth distributed in the same way or differently?
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1 answer
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How do we determine if wealth will be created or destroyed (and how much) when we want to provide (quasi)public goods?

It seems quite simple under framework of free market, when there are no taxes or subsidies,price celling or price floors, etc, that can mess up the market: if there is profit (or will be, according to ...
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Wealth Creation: Where does the money come from?

I'm trying to better understand wealth creation– let's use trade as an example. I've bought a cup for \$2 and sold it for \$10. We've "created some new wealth" there– but without a net increase in ...
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2 votes
1 answer
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The relationship between indirect utility and expenditure functions

I am trying to understand the fact that $e(p, v(p,y)) = y$. There is a proof in the text Advanced Microeconomic Theory (Jehle and Reny) that states the following: Because $u(·)$ is strictly ...
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Should mean wages increase with inflation?

Should mean wages increase with inflation? If not, why? Has this profound consequences in the redistribution of wealth? (not an expert in economics...I apologise is the question is too naif)
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4 answers
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Is wealth inequality actually a problem

I have been searching around online, but cannot really find an answer to my question. I can find a lot of material covering wealth inequality and how it has developed over time, but haven’t found any ...
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Printing money to redistribute wealth

A fictional country has 100 people. The total printed money is $2000. Ten rich people own half of it ($100 each), the remaining ...
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Why have trickle-down economics failed to trickle down to the middle-class and poor in recent years?

Trickle-down economics, also referred to as trickle-down theory, is an economic theory that advocates reducing taxes on businesses and the wealthy in society as a means to stimulate business ...
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How much the wealth inequality increased in the USA in the last decades?

Are there any studies trying to measure the increase of the wealth inequality in the USA? Say for example how much it increased, comparing with 1990. Or compared with any other moment in time after ...
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1 answer
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How is wealth created? [duplicate]

The production of 'goods and services' and 'innovation' is the usual answer. I feel that doesn't really answer the question. These things can be traded for wealth but they don't generate new wealth. ...
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2 votes
2 answers
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Did the idea of “making money” originate in the United States?

I am currently reading Atlas Shrugged by Ayn Rand and I came across an interesting paragraph related to Economics and American History. If you ask me to name the proudest distinction of Americans, ...
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1 vote
1 answer
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Estimating national intangible wealth

I seem to recall reading about the following research regarding "national intangible wealth" (IIRC): For each country, compute the GDP. Convert the GDP to "total national capital" using an interest ...
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Effects of finding infinite gold reserve

Suppose an infinite reserve of gold was found. What would be the consequences to the economy in general. Would it have major negative effects?
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if the richest 85 people give away all their money?

I once heard a fact that the richest 85 people are as wealthy as half the world's population put together. My question is, what does that mean? Does it mean that there is some feasible method in ...
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6 votes
4 answers
480 views

How is money created?

This might seem like a really simple question, but I am really troubled by it on a macro scale. The money has to come from somewhere. Someone might start up a business that creates things or takes ...
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0 votes
1 answer
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Meaning of innovation in the wealth creation process

Is there a formal definition or measure of wealth that captures the notion that with improving technology "life gets better"? A stupid example of what I mean would be the invention of the iPhone. I ...
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