What Is Wealth?
Wealth measures the value of all the assets of worth owned by a person, community, company, or country. Wealth is determined by taking the total market value of all physical and intangible assets owned, then subtracting all debts. Essentially, wealth is the accumulation of scarce resources.
Specific people, organizations, and nations are said to be wealthy when they are able to accumulate many valuable resources or goods. Wealth can be contrasted to income in that wealth is a stock and income is a flow, and it can be seen in either absolute or relative terms.
KEY TAKEAWAYS
Wealth is an accumulation of valuable economic resources that can be measured in terms of either real goods or money value.
Net worth is the most common measure of wealth, determined by taking the total market value of all physical and intangible assets owned, then subtracting all debts.
The concept of wealth is usually applied only to scarce economic goods; goods that are abundant and free for everyone provide no basis for relative comparisons across individuals.
Unlike income, which is a flow variable, wealth measures the amount of valuable economic goods that have been accumulated at a given point in time.
The relative differences in wealth between people are what we usually refer to in order to define who is wealthy or not.
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