Wednesday, December 06, 2006

 

Global Wealth

Greg Mankiw points us to a new study by the United Nations University WIDER (World Institute for Development Economics Research). This report looks at wealth-- net worth of households-- instead of the more commonly studied income. The results of the study show even more inequality in the distribution of wealth than in the distribution of income. (To economists, this is not a surprise.) The rich countries are strikingly richer.

Uruguay's net worth per capita was $11,807 (based on current exchange rates.) For comparison, the US net worth per capita was $143,727. Japan had the highest net worth at $180,837.

Some other Latin American countries (net worth per capita, in US $):
Argentina 25,410
Brazil 9,566
Chile 13,722
Dominican Republic 5,713
Mexico 13,070
Venezuela 10,101


A couple of notes:
1. The data is from 2000, so it doesn't fully reflect the regional economic crises.
2. Wealth is also not distributed evenly within a country, so these figures don't necessarily reflect a "typical" person's wealth.
3. These figures don't account for differences in price levels in different countries. The full report does include purchasing power parity numbers. (For these Latin American countries, PPP-adjusted measures of wealth are substantially higher. For Japan, the PPP wealth measure is much lower because of the high prices in that country.)

This map (pdf) gives a quick overview. See the press release (pdf) or the full report(pdf) for more detail.

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Comments:
Im not an Economist but data from 2000 has to be 5 years in the garbage.Japan is now cheaper to live than Hawaii.This is from personal experience over the last 20 years.The meadian cost of housing in Honolulu is a 1bdr,1bath,Condo costing 500,000$ 30% more than Osaka.Food is almost the same,clothing more expensive in Hawaii.Gasoline more in Japan but America has always had a cheap energy policy.Gas was 4$ a gallon in England 30 years ago!
What good are figures from 7 years ago?
 
Old data is as important as new one. How can we do a study without it?

However, I will expect to see the latest figures on a blog.
 
From my understanding, this study used the most recent data available on wealth. Other measures, like income or price levels, are calculated monthly or yearly, but wealth is much harder to measure.

For a cross-country study like this one, the data are remarkably current and complete. Data availability on poor countries is always a problem. Even in rich countries, like the US, we use a lot of data from the decennial census-- which only gives us new data every 10 years.

For their study, the ranking of the individual countries is not particularly important. So, if Japan and the US switch places at the very top of the distribution it will make absolutely no difference in their conclusions.

The kind of changes in the distribution of wealth that would effect their study, take place very, very slowly-- over generations.

I agree that it would be very interesting to know the changes in wealth for these countries over time, but haven't seen that data.
 
You explained that well Chuck. No wonder that you win teaching awards.

Best, Larry
 
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