Distribution of wealth facts for kids

The distribution of wealth looks at how wealth is shared among different people or groups in a society. It helps us understand economic inequality, which is when some people have a lot more money and things than others.

This is different from income distribution, which is about how much money people earn. Wealth is about what people own, like houses, cars, and savings, minus what they owe, like loans. Experts say that wealth is usually much more unevenly shared than income.

For more details on how countries compare, you can look at lists like list of countries by wealth equality or list of countries by wealth per adult.

What is Wealth?

Global share of wealth by wealth group in 2020, from Credit Suisse.

World distribution of wealth, GDP, and population by region in 2000.

For a person, wealth is simply their net worth. This means: Wealth = What you own (like property, money in the bank) – What you owe (like debts or loans).

Sometimes, a broader idea of wealth includes "human capital," which is like your skills and knowledge. For example, the United Nations talks about "inclusive wealth," which adds up natural resources, human skills, and physical things people own.

Think of it this way: how your wealth changes depends on how much you save. Change in wealth = Savings = Income – Expenses. So, even if someone earns a lot, if they spend a lot, their wealth might not grow much, or it could even shrink!

How We Look at Wealth Distribution

We can study wealth distribution in many ways. One common method is to compare the wealth of the richest people to the average person. For example, in many societies, the richest 10% of people control more than half of all the wealth.

A common idea is the Pareto distribution, which suggests that a small percentage of people own a large percentage of the wealth. For instance, it's often said that the top 20% of people own 80% of the wealth.

Wealth over people (WOP) curves are a cool way to see wealth distribution. Imagine lining up everyone in a country from richest to poorest. The curve shows how much wealth each group has compared to the richest people. In the real world, the richest 1% always have the most wealth, and sadly, there are always some people with no wealth at all.

This kind of comparison helps us understand how fair a society's wealth distribution is. The Gini coefficient is a number often used for this, where a higher number means more inequality.

Why Wealth Distribution Matters

For a long time, people have studied how wealth is shared. Before the 1960s, most information came from tax records. These records showed that wealth was very unevenly distributed, and that inheriting money played a big role in who was rich. It also seemed that wealth inequality was slowly decreasing.

More recently, research has focused on why individuals have different amounts of wealth. This is partly because saving for retirement became more important. Also, we now have much better data about what people own and save, along with other details about their households. This helps explain why some people have more wealth than others.

Wealth Inequality Around the World

Wealth inequality means that wealth is not shared evenly among people and groups. Even in ancient times, archaeologists can see this by looking at house sizes – bigger houses usually meant wealthier families. Studies show that ancient wealth differences in places like Europe and Asia were bigger than in North America.

Global Facts

Share of wealth globally by year, according to Oxfam, based on net worth.

A study from the World Institute for Development Economics Research at United Nations University found that in 2000:

• The richest 1% of adults owned 40% of all global assets.
• The richest 10% of adults owned 85% of the world's total wealth.
• The bottom half of the world's adults owned only 1% of global wealth.

Another study in 2006 found that the richest 2% owned more than half of all household assets worldwide.

In 2012, the top 0.6% of the world's population (adults with over US$1 million in assets) held 39.3% of global wealth. The next 4.4% held 32.3%, and the remaining 95% of the world held only 28.4% of the wealth. These huge differences are even bigger than global income inequality. For example, in 2012, the poorest 60% of the world had the same amount of wealth as the 1,226 richest billionaires on Forbes' list.

A 2021 Oxfam report showed that the 10 richest men in the world owned more than the combined wealth of the bottom 3.1 billion people (almost half the world's population). Their wealth even doubled during the pandemic!

The 'Global Wealth Report 2021' by Credit Suisse showed a big increase in wealth inequality during 2020. The richest 1.1% of adults owned 45.8% of the total wealth. This was an increase of 4.8% compared to 2013. Meanwhile, the bottom half of the world's adults owned only 1.3% of the total wealth, a decrease of 1.7% from 2013. This shows that wealth inequality grew significantly.

One big reason for this growing inequality is the COVID-19 pandemic. Credit Suisse believes that the pandemic's impact on jobs and income in 2020 likely hurt the poorest people, forcing them to use savings or go into debt. On the other hand, the richest people seemed to benefit from lower interest rates, which made their stocks and house prices go up.

In 2020, there were 56 million millionaires worldwide, an increase of 5.2 million from the year before. The United States had the most millionaires (22 million, or about 39% of the world's total), followed by China (9.4%) and Japan (6.6%).

Real Estate and Land Ownership

Many households don't own land, even if they have an income. For example, in Baltimore, Maryland, the top 10% of land owners (mostly companies) own 58% of the valuable land. The bottom 10% of land owners own less than 1%. This kind of information is used to support ideas like land value taxation, which taxes the value of land itself.

The Wealth Pyramid

Pyramid of global wealth distribution in 2013.

In 2013, Credit Suisse created a "wealth pyramid" to show how wealth is distributed. It uses net worth, meaning your assets minus your debts (like mortgages). The pyramid has a wide base of people with low wealth and gets narrower at the top, where fewer people hold much more wealth.

In 2013, Credit Suisse estimated that 3.2 billion people (more than two-thirds of adults worldwide) had wealth below US$10,000. Another billion adults had wealth between US$10,000 and US$100,000. Even though these groups have modest wealth individually, their total wealth adds up to US$40 trillion! This shows there's a lot of potential for new products and services for these often-overlooked groups.

The 2013 pyramid showed that:

• Half of the world's total wealth belonged to the top 1%.
• The top 10% of adults held 85% of the world's wealth, while the remaining 90% held only 15%.
• The top 30% of adults held 97% of all wealth.

Wealth Pyramid in 2020

Credit Suisse updated their wealth pyramid in 2020. It was built the same way, using net worth. In 2020:

• About 2.88 billion people (55% of adults) had wealth below US$10,000.
• 1.7 billion people (38.2% of adults) had wealth between US$10,000 and US$100,000.
• 583 million people had wealth between US$100,000 and US$1,000,000.
• About 56 million people (1.1% of adults) had wealth over US$1,000,000.

Comparing 2013 and 2020 Pyramids

There are big differences between the 2013 and 2020 pyramids. For the first time, more than 1% of all adults globally had over US$1,000,000 in wealth. Credit Suisse says this increase shows how the pandemic affected the economy, creating a gap between financial assets and real household wealth.

The biggest change was in the US$10,000 to US$100,000 group, which grew by almost 10% of the total adult population since 2013. Credit Suisse explains that this growth is due to the increasing wealth in developing countries, especially China, and the expansion of the middle class there. The group with wealth between US$100,000 and US$1,000,000 also grew by 3.4%. This group usually includes the middle class in developed countries.

Future Wealth Outlook (2020-2025)

The 'Global Wealth Report 2021' predicts that global wealth will grow by 39% over the next five years, reaching US$583 trillion by 2025. Wealth per adult and the number of millionaires are also expected to increase.

The wealth pyramid is expected to change:

• The lowest wealth group (below US$10,000) will likely shrink by about 108 million people.
• The lower-middle group (US$10,000 - US$100,000) is projected to grow by 237 million adults, mostly from lower-income countries.
• The upper-middle group (US$100,000 - US$1 million) is projected to grow by 178 million adults, mostly from upper-middle-income countries.

The number of global millionaires could go over 84 million by 2025, an increase of almost 28 million from 2020. This increase isn't just in rich countries like the USA or Europe; it's also expected to grow fast in lower-income countries. China is expected to see the biggest increase, with about 4.8 million new millionaires. This will also lead to more "Ultra High Net Worth Individuals" (people with over US$50 million).

Gini Coefficient Explained

The Gini coefficient (or Gini index) is a number used to measure wealth inequality.

• A Gini coefficient of 0 means perfect equality: everyone has the same amount of wealth.
• A Gini coefficient of 1 (or 100%) means maximal inequality: one person has all the wealth, and everyone else has none.

According to Credit Suisse's 'Global Wealth Report 2021', Brunei had the highest Gini coefficient in 2021 (91.6%), meaning its wealth distribution was very unequal. Slovakia had the lowest (50.3%), making it the most equal country in terms of wealth distribution. The report also showed that wealth inequality generally increased between 2019 and 2021, possibly due to the COVID-19 pandemic. Brazil saw the biggest increase in its Gini coefficient during this time.

The table below shows detailed statistics from the Credit Suisse Research Institute's "Global Wealth Databook" (2021).

Click at right to show/hide table with detailed statistics

Country Adults (In 1,000) Wealth per adult (USD) Distribution of adults (%) by wealth range (USD) Gini (%) Mean Median Under 10k 10k – 100k 100k – 1M Over 1M Afghanistan 18,356 1,744 734 97.6 2.4 0.1 0.0 72.8 Albania 2,187 30,524 15,363 41.0 54.2 4.7 0.1 68.2 Algeria 27,620 8,871 2,302 87.0 11.7 1.2 0.1 84.8 Angola 14,339 3,529 1,131 93.5 6.2 0.2 0.0 80.6 Argentina 30,799 7,224 2,157 88.2 11.2 0.6 0.0 81.2 Armenia 2,176 22,573 9,411 52.3 44.0 3.5 0.1 73.0 Australia 19,159 483,755 238,072 9.8 20.7 60.0 9.4 65.6 Austria 7,271 290,348 91,833 14.2 36.9 44.1 4.8 73.5 Azerbaijan 7,155 11,926 5,022 73.5 25.2 1.3 0.0 72.7 Bahamas 278 56,737 7,507 54.0 39.7 5.7 0.6 91.4 Bahrain 1,318 87,559 14,520 45.0 48.0 6.1 0.9 88.9 Bangladesh 106,060 7,837 3,062 84.6 14.6 0.7 0.0 75.2 Barbados 221 63,261 21,071 41.0 46.0 12.4 0.6 80.4 Belarus 7,367 23,278 12,168 45.9 51.3 2.8 0.1 66.7 Belgium 8,993 351,327 230,548 11.9 20.1 62.3 5.7 60.3 Belize 245 10,364 3,015 82.0 16.6 1.4 0.0 83.4 Benin 5,839 2,558 890 95.6 4.3 0.1 0.0 78.2 Bolivia 7,088 12,286 3,804 78.1 20.5 1.3 0.1 81.0 Bosnia and Herzegovina 2,637 30,597 15,283 41.0 54.1 4.8 0.1 68.6 Botswana 1,358 15,598 3,680 80.0 16.8 3.1 0.1 87.3 Brazil 153,307 18,272 3,469 79.5 17.5 2.8 0.1 89.0 British Caribbean 567 45,109 14,684 44.0 47.7 7.9 0.4 80.8 Brunei 309 39,098 5,122 64.0 32.1 3.5 0.4 91.6 Bulgaria 5,586 36,443 17,403 38.7 54.9 6.2 0.2 70.1 Burkina Faso 9,480 1,681 622 98.0 1.9 0.1 0.0 76.8 Burundi 5,381 728 281 99.5 0.5 0.0 0.0 75.1 Cambodia 10,180 5,895 2,031 90.7 8.7 0.6 0.0 78.7 Cameroon 12,716 3,042 941 94.3 5.5 0.2 0.0 81.6 Canada 29,934 332,323 125,688 20.7 25.1 48.6 5.6 71.9 Central African Republic 2,161 840 212 98.8 1.2 0.0 0.0 85.9 Chad 7,059 1,117 355 98.7 1.3 0.1 0.0 80.6 Chile 14,259 53,591 17,747 39.1 51.6 8.8 0.5 79.7 China 1,104,956 67,771 24,067 20.9 66.1 12.5 0.5 70.4 Colombia 35,612 16,928 4,854 72.0 25.4 2.5 0.1 82.7 Comoros 447 5,397 1,466 91.5 7.9 0.6 0.0 84.8 Congo, Dem. Rep. 39,740 1,240 356 98.3 1.6 0.1 0.0 83.2 Congo, Rep. 2,707 2,180 582 95.6 4.2 0.1 0.0 84.7 Costa Rica 3,696 44,337 14,662 44.0 47.4 8.4 0.3 79.9 Croatia 3,303 69,140 34,945 27.0 57.0 15.5 0.5 68.5 Cyprus 679 142,304 35,300 23.0 57.0 18.3 1.7 80.7 Czechia 8,528 78,103 23,794 29.6 55.7 14.0 0.7 77.7 Denmark 4,557 376,069 165,622 15.4 25.4 52.5 6.7 73.6 Djibouti 618 3,112 1,077 94.0 6.0 0.0 0.0 78.8 Dutch Caribbean 258 40,909 16,810 40.0 52.7 7.1 0.2 69.1 Ecuador 11,361 17,151 5,444 69.9 27.9 2.1 0.1 80.8 Egypt 59,547 19,468 6,329 66.5 30.7 2.6 0.1 79.2 El Salvador 4,201 34,003 11,372 47.6 46.0 6.2 0.2 79.1 Equatorial Guinea 776 18,246 4,561 77.0 18.8 4.1 0.1 86.3 Eritrea 1,728 2,846 1,086 95.2 4.7 0.1 0.0 75.7 Estonia 1,044 77,817 38,901 30.5 53.5 15.3 0.7 73.8 Ethiopia 57,104 3,540 1,527 94.4 5.4 0.2 0.0 71.1 Fiji 564 15,708 5,764 69.0 28.3 2.6 0.1 77.4 Finland 4,373 167,711 73,775 27.8 35.2 35.1 1.9 74.0 France 49,967 299,355 133,559 14.8 27.0 53.3 4.9 70.0 French Caribbean 631 68,443 23,740 36.0 44.0 19.5 0.5 73.8 Gabon 1,216 13,696 4,685 74.0 24.5 1.4 0.1 79.3 Gambia 1,115 2,500 658 94.9 4.9 0.2 0.0 84.9 Georgia 2,959 14,162 4,223 77.7 20.7 1.5 0.1 81.3 Germany 68,015 268,681 65,374 10.6 45.2 39.8 4.3 77.9 Ghana 16,617 6,132 2,198 88.5 11.1 0.4 0.0 77.5 Greece 8,462 104,603 57,595 22.1 49.3 27.7 0.9 65.7 Guinea 6,078 2,942 938 94.5 5.4 0.2 0.0 80.8 Guinea-Bissau 949 1,828 670 97.0 3.0 0.0 0.0 77.6 Guyana 497 12,280 4,637 74.0 24.6 1.4 0.0 76.5 Haiti 6,621 767 193 99.2 0.7 0.0 0.0 85.2 Hong Kong 6,292 503,335 173,768 13.7 23.7 54.3 8.3 74.6 Hungary 7,769 53,664 24,126 21.4 67.6 10.7 0.3 66.5 Iceland 255 337,787 231,462 6.0 18.0 70.7 5.3 50.9 India 900,443 14,252 3,194 77.2 21.1 1.7 0.1 82.3 Indonesia 180,782 17,693 4,693 67.2 30.8 1.9 0.1 77.7 Iran 57,987 22,249 7,621 59.1 37.1 3.7 0.1 78.6 Iraq 21,247 14,506 6,378 68.3 30.1 1.6 0.1 71.0 Ireland 3,619 266,153 99,028 30.8 19.7 44.5 5.0 80.0 Israel 5,626 228,268 80,315 15.8 41.2 40.1 2.9 73.4 Italy 49,746 239,244 118,885 15.5 30.1 51.4 3.0 66.5 Jamaica 2,041 19,893 5,976 66.7 30.3 2.9 0.1 82.0 Japan 104,953 256,596 122,980 11.0 32.6 52.9 3.5 64.4 Jordan 5,866 28,316 10,842 48.3 47.1 4.5 0.2 75.9 Kazakhstan 12,226 33,463 12,029 46.3 49.3 4.2 0.2 76.4 Kenya 27,473 12,313 3,683 79.6 18.8 1.5 0.1 82.2 Korea, South 42,490 211,369 89,671 14.8 38.3 44.4 2.5 67.6 Kuwait 3,146 129,890 28,698 42.8 44.0 10.7 2.5 86.5 Kyrgyzstan 3,927 5,816 2,238 89.7 9.8 0.5 0.0 75.7 Laos 4,288 7,379 1,610 91.6 7.0 1.3 0.0 87.9 Latvia 1,477 70,454 33,884 36.0 50.5 12.7 0.8 80.9 Lebanon 4,548 55,007 18,159 40.6 50.5 8.4 0.5 79.7 Lesotho 1,243 1,226 264 97.8 2.2 0.1 0.0 88.6 Liberia 2,502 4,453 1,464 91.9 7.8 0.3 0.0 80.1 Libya 4,440 17,198 6,512 67.0 31.0 1.9 0.1 76.0 Lithuania 2,166 63,500 29,679 29.3 58.0 12.2 0.5 71.0 Luxembourg 498 477,306 259,899 13.0 19.0 59.2 8.8 67.0 Madagascar 13,812 1,962 666 96.9 3.0 0.1 0.0 79.3 Malawi 8,887 2,045 606 96.2 3.7 0.1 0.0 82.4 Malaysia 22,315 29,287 8,583 55.0 41.1 3.7 0.2 82.9 Maldives 409 25,511 8,519 56.0 39.3 4.5 0.2 79.8 Mali 8,625 2,424 869 96.0 3.9 0.1 0.0 77.6 Malta 358 148,934 84,390 13.0 45.0 40.6 1.4 61.7 Mauritania 2,370 2,788 1,037 95.2 4.7 0.1 0.0 76.3 Mauritius 968 63,372 27,456 31.0 56.0 12.5 0.5 72.1 Melanesia 711 31,106 12,183 46.0 48.6 5.2 0.2 75.8 Mexico 85,136 42,689 13,752 44.7 46.9 8.1 0.3 80.5 Micronesia 341 13,193 4,876 74.0 23.9 2.1 0.0 77.9 Moldova 3,188 15,491 7,577 61.8 36.5 1.7 0.0 69.4 Mongolia 2,053 6,324 2,546 88.0 11.5 0.5 0.0 74.4 Montenegro 476 60,310 30,739 29.0 57.0 13.6 0.4 68.4 Morocco 24,654 13,459 3,874 78.4 19.7 1.9 0.1 81.9 Mozambique 14,186 1,003 345 98.9 1.0 0.1 0.0 79.1 Myanmar 35,734 5,025 2,458 91.7 8.0 0.3 0.0 67.0 Namibia 1,375 15,294 3,677 80.5 16.4 3.0 0.1 86.6 Nepal 17,887 4,056 1,437 93.3 6.3 0.3 0.0 78.1 Netherlands 13,462 377,092 136,105 13.6 29.4 49.3 7.7 75.3 New Zealand 3,600 348,198 171,624 21.2 20.0 52.5 6.3 69.9 Nicaragua 4,107 12,239 3,694 78.2 20.5 1.3 0.1 81.0 Niger 9,739 1,287 492 98.7 1.3 0.1 0.0 75.6 Nigeria 95,931 6,451 1,474 91.7 7.6 0.7 0.0 85.8 Norway 4,184 275,880 117,798 28.0 19.0 48.8 4.2 78.5 Oman 3,765 39,434 9,886 50.5 43.1 6.0 0.4 86.7 Pakistan 123,522 5,258 2,187 90.5 9.2 0.4 0.0 73.2 Panama 2,843 43,979 13,147 45.3 46.6 7.8 0.3 82.5 Papua New Guinea 4,941 6,710 1,790 91.3 7.7 1.0 0.0 84.3 Paraguay 4,454 11,962 3,644 78.8 19.9 1.2 0.1 81.6 Peru 22,530 17,017 5,445 70.4 27.4 2.1 0.1 80.1 Philippines 66,960 15,290 3,155 83.1 14.8 2.0 0.1 86.9 Poland 30,315 67,477 23,550 19.8 64.8 14.9 0.5 70.7 Polynesia 423 37,998 14,076 44.0 49.3 6.4 0.3 77.9 Portugal 8,339 142,537 61,306 23.2 45.1 30.0 1.6 70.5 Qatar 2,396 146,730 83,680 12.0 45.3 41.7 1.0 58.1 Romania 15,208 50,009 23,675 32.1 58.5 9.1 0.3 70.1 Russia 111,845 27,162 5,431 72.8 23.8 3.1 0.2 87.8 Rwanda 6,581 4,188 1,266 92.8 6.9 0.3 0.0 81.9 Sao Tome and Principe 104 4,029 1,702 92.4 7.3 0.2 0.0 73.1 Saudi Arabia 24,186 68,697 15,495 46.4 44.4 8.2 1.0 86.7 Senegal 7,975 4,702 1,570 91.4 8.3 0.3 0.0 79.7 Serbia 5,480 31,705 14,954 41.7 52.9 5.3 0.1 70.6 Seychelles 69 63,427 24,651 36.0 51.0 12.5 0.5 75.9 Sierra Leone 3,937 995 370 99.0 0.9 0.0 0.0 76.7 Singapore 4,887 332,995 86,717 16.2 38.6 39.7 5.5 78.3 Slovakia 4,346 68,059 45,853 11.6 69.8 18.4 0.2 50.3 Slovenia 1,672 120,173 67,961 18.0 53.0 28.2 0.8 67.1 South Africa 37,590 20,308 4,523 75.8 20.2 3.9 0.2 88.0 Spain 37,798 227,122 105,831 16.7 31.6 48.6 3.0 69.2 Sri Lanka 14,732 23,832 8,802 54.3 42.0 3.7 0.1 76.8 Sudan 21,941 1,014 383 99.0 0.9 0.1 0.0 75.9 Suriname 382 5,644 1,349 91.2 8.1 0.7 0.0 87.1 Sweden 7,794 336,166 89,846 34.0 18.4 40.3 7.3 87.2 Switzerland 6,958 673,962 146,733 11.9 33.7 43.2 11.2 78.1 Syria 10,811 2,197 807 96.3 3.6 0.1 0.0 77.2 Taiwan 19,633 238,862 93,044 13.9 38.6 44.4 3.1 70.8 Tajikistan 5,227 4,390 1,844 92.4 7.3 0.3 0.0 73.1 Tanzania 27,744 3,647 1,433 93.7 6.1 0.2 0.0 74.5 Thailand 54,054 25,292 8,036 55.5 41.9 2.5 0.2 77.1 Timor-Leste 689 5,185 2,838 91.4 8.3 0.3 0.0 62.6 Togo 4,084 1,484 468 98.0 2.0 0.1 0.0 81.2 Trinidad and Tobago 1,032 44,182 15,649 42.5 49.0 8.2 0.3 78.0 Tunisia 8,207 17,550 6,177 67.4 30.2 2.3 0.1 77.8 Turkey 57,768 27,466 8,001 57.6 38.8 3.4 0.2 81.8 Turkmenistan 3,722 20,328 9,030 54.0 43.2 2.7 0.1 70.6 Uganda 19,830 1,994 646 96.6 3.3 0.1 0.0 80.4 Ukraine 34,639 13,104 2,529 79.1 19.5 1.3 0.1 84.4 United Arab Emirates 8,053 115,476 21,613 45.1 46.0 6.8 2.1 88.8 United Kingdom 52,568 290,754 131,522 18.0 27.8 49.5 4.7 71.7 United States 249,969 505,421 79,274 26.3 28.5 36.4 8.8 85.0 Uruguay 2,530 60,914 22,088 37.0 51.3 11.2 0.4 77.2 Venezuela 18,359 21,040 7,341 60.5 36.8 2.5 0.1 78.1 Vietnam 68,565 14,075 4,559 76.3 21.9 1.8 0.1 80.2 Yemen 15,281 5,581 1,223 93.0 6.2 0.8 0.0 88.0 Zambia 8,331 3,068 692 94.3 5.5 0.2 0.0 87.7 Zimbabwe 7,086 7,131 2,356 86.9 12.5 0.6 0.0 79.8

Where Wealth is Located

Countries by total wealth (trillions USD), according to Credit Suisse.

Wealth is not spread evenly across the world. In the late 1900s, it was mostly found in the G8 countries (like the USA, UK, Germany) and other rich Western nations, plus some Asian and OPEC countries. In the 21st century, the G8 countries still hold a lot of wealth, with the United States of America leading with 30.2%. Other developed countries, some Asia-Pacific nations, and OPEC countries also have significant wealth.

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  World wealth distribution by country (using PPP, which adjusts for cost of living)

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  World wealth distribution by region (using PPP)

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  World wealth distribution by country (using exchange rates)

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  World wealth distribution by region (using exchange rates)

Worlds regions by total wealth (in trillions USD) in 2018.

Wealth by Region

In 2007, a small group of 147 companies controlled almost 40% of the money value of all large international businesses.

Wealth in the United States

In 2021, the 10th percentile of American households had zero net worth, while the 90th percentile had $1.6 million.

Higher education in the US often means higher household wealth.

Married couples in the US tend to have almost three times more wealth than single people.

According to PolitiFact, in 2011, the 400 richest Americans had more wealth than half of all Americans combined. Inherited wealth (money passed down from family) might help explain why many rich Americans had a "substantial head start." In September 2012, the Institute for Policy Studies reported that "over 60 percent" of the Forbes 400 richest Americans "grew up in substantial privilege."

In 2007, the richest 1% of Americans owned 34.6% of the country's total wealth. The next 19% owned 50.5%. This means the top 20% of Americans owned 85% of the country's wealth, and the remaining 80% of the population owned only 15%.

After the Great Recession (a big economic downturn) that started in 2007, the share of total wealth owned by the top 1% grew from 34.6% to 37.1%. The top 20% saw their share grow from 85% to 87.7%. The Great Recession also caused the average household wealth to drop by 36.1%, but for the top 1%, it only dropped by 11.1%. This made the gap between the 1% (the very rich) and the 99% (everyone else) even wider.

A study by Dan Ariely and Michael Norton (2011) found that Americans, no matter their political views, greatly underestimate how much wealth inequality there is in the US. They would prefer a more equal distribution of wealth.

Wealth inequality in the United States increased from 1989 to 2013.

How Wealth Becomes Concentrated

Wealth concentration is when wealth, over time, gathers in the hands of a few people or groups. Those who already have wealth can invest in new ways to make money, or use their existing wealth to get even richer.

Economic Factors

Global share of wealth by wealth group.

For wealth to become concentrated, two main things are needed:

• First, wealth must already be unevenly distributed. This is often seen in a "wealth gap" where some people start with more. As mentioned, the 400 richest Americans had more wealth than half of all Americans combined. Inherited wealth can give people a big head start.
• Second, a small difference in wealth must grow into a much larger difference over time. This is like a positive feedback loop in the economy. Studies show that even by chance, if people earn returns on their investments, wealth can become extremely concentrated, with a few people eventually owning almost everything.

Why the Rich Get Richer

If wealth is already unevenly distributed, here are some reasons why it might become even more concentrated:

• Being rich helps you earn more: Wealthy people might get better-paying jobs (for example, by going to elite schools).
• High earners can become rich: People who earn a lot of money can become rich by saving and investing.
• Rich people can influence government: Wealthy individuals can use their influence to change laws in their favor, which can increase their wealth even more. This can happen through things like funding political campaigns.

These reasons can work together, making wealth concentration even stronger. Some argue that obstacles to wage growth for ordinary workers are linked to how money influences politics, especially in the US.

Things that can help balance wealth concentration include certain taxes, like a wealth tax (a tax on total assets), inheritance tax (a tax on inherited money), and progressive taxation (where richer people pay a higher percentage of their income in taxes). However, concentrated wealth doesn't always stop wages from growing for lower-paid workers.

Interestingly, Warren Buffett, a famous investor and one of the world's wealthiest people, said in 2005 and 2006 that his class, the "rich class," was "waging class warfare" and "winning."

Sharing Wealth and Public Policy

In many societies, governments try to redistribute wealth through things like property redistribution, taxation, or regulation. Sometimes this is to help the upper class, and sometimes it's to reduce economic inequality.

This idea goes back a long way, even to ancient Rome, where laws were passed to limit how much wealth or land one family could own. Reasons for limiting wealth include wanting everyone to have a fair chance, worrying that too much wealth leads to political corruption, or believing it will gain support from voters. Different forms of socialism aim to reduce unequal wealth distribution and the problems it causes.

During the Age of Enlightenment, Francis Bacon wrote that good policy should ensure "treasures and monies in a state be not gathered into a few hands… Money is like fertilizer, not good except it be spread."

The rise of Communism as a political movement was partly due to the huge differences in wealth under capitalism, where a few lived in luxury while many lived in extreme poverty. However, the ideas of Karl Marx and Frederick Engels focused more on who owned the means of production (like factories) rather than just how wealth was distributed.

Today, a mix of labor movements, new technology, and social liberalism has reduced extreme poverty in developed countries. However, big differences in wealth and poverty still exist in many parts of the world.

The World Economic Forum's Outlook on the Global Agenda 2014 listed widening income differences as a major worldwide risk. Studies also show that countries with high income inequality and weak support for unemployed people often have worse mental health outcomes for those without jobs.

See Also

• Wealth inequality in the United States
• Wealth distribution in Europe
• Gini coefficient
• Social inequality
• Economic inequality
• List of countries by total wealth
• List of countries by wealth per adult
• List of countries by wealth inequality