A new study on the World Distribution of household wealth has been published by the UN University.
The research finds that assets $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 study (here) is apparently the first of its kind. No doubt it will be used by the right to promote liberalism in order to generate wealth, and by the left to redistribute just a tiny weeny amount to the poor of the world.
What seems to be missing though is that all this means. What I want to know is, what standard of living does an African farmer with $2,000 to his name enjoy? Comparing his wealth to a comparable number in the US is meaningless in this respect. Indeed, the press release makes such a comparison:
The authors go on to note that ‘many people in high-income countries have negative net worth and - somewhat paradoxically - are among the poorest people in the world in terms of household wealth’.
Of course they as far as household wealth is concerned, but from a policy perspective, this just illustrates that household wealth isn’t even half the story. Leaving aside envy, unhappiness and inequality, I’d much rather be a poor person in Europe or the US than in Africa, not least because I have a chance of escaping my poverty, so institutions matter. And there is an important interaction here as well. When I was in Uganda, I had the opportunity to help a prospective passion fruit farmer who required about $800 for his venture. He emailed me a business plan because his problem was not just a lack of collateral in securing the loan locally, but an efficient and supportive infrastructure whereby he could realise his plan.
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