Questions tagged [wealth]
The wealth tag has no usage guidance.
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Why isn't Net Worth Change of a country used to calculate its economic power, as opposed to GDP?
As I understand, GDP is the sum of market values of final goods and services produced in a country in a year.
Let me define Net Wealth Change or NWC as the difference between a country’s net worth at ...
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Why are final services sold internally (to residents) accounted for in a country’s GDP?
My understanding is that many pure services result in no direct creation of global wealth, but only in a transfer of wealth.
Here I mean wealth in an economics sense as the sum of goods and ...
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Could Economic classism cause direct economic problems independent of sociopolitics?
Typically Economic classism is a point mentioned a lot in sociopolitical discourse. But, most of the discourse seemed to be about sociopolitical problems induced by economic classism occuring rather ...
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What data / evidence is there to support the assertion that wealth taxes are ineffective because they're difficult to implement?
Whenever I see discussions of wealth taxes, inevitably one main assertion keeps being, well, asserted: "wealth tax will never work because it's too difficult to implement". Of course more ...
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Linear Engel Curve
How to prove that if the Engel curves (expenditures as a function of wealth) are linear in wealth, then the indirect utility function has the form $v_{i}(p,a_{i})=\alpha_{i}(p)+\beta(p)a_{i}$ for an ...
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Comparing manufacturing and services sectors with respect to the scope for division of labor
In the Wealth of Nations, Adam Smith compares agriculture and manufacturing and concludes that due to the reduced scope for specialization in the former as compared to the latter, those economies that ...
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Do inheritances break Piketty's r>g model's conclusions?
In Capital in the Twenty-First Century Piketty suggests that if the return on capital is higher than the economic growth, then wealth inequality in society will rise.
Yet, this model seems to ignore ...
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How to prove Kelly criterion maximizes wealth compared to other betting strategies, and how to generalize such a proof
The Kelly criterion approach to a betting situation basically involves maximizing the expected logarithm of one's wealth. The assumption is that maximizing the logarithm appears to inadvertently ...
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Where can we find M2 (or M1) data breakdown by wealth percentiles?
(this question refers to the US only)
We have official data on M2 by the Fed, but, if I understand correctly, this M2 data includes even bank deposits of firms/corporations where I am after the ...
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How much does generational wealth contributes to wealth inequality?
I've been reading about income/wealth inequality and the ways different countries (US/EU) are trying to solve this.
I've also learned about two rivaling points of view that can be expressed as follows:...
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On quadratic utility functions
Question
A risk-averse, non-satiated investor has decided to use the utility function $$U(w) = w + dw^2,$$ where $$d \leq 0$$ is a constant, to describe his preferences.
Derive an upper bound for $w$, ...
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What would happen if someone suddenly gained 1 Trillion $?
I was wondering, if I was suddenly worth 1 Trillion $, say a sudden bank glitch gave me the money, and nobody noticed, what would happen
I suppose massive inflation would make the dollar worthless, ...
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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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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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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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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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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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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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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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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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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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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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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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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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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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