Wealth
Wealth |
anything owned by people with money value (house, machinery, financial assets, etc.) |
Non-human wealth |
materialistic things (house, assets, etc.) |
Human wealth |
education, skills, characteristics, training, etc. (it is difficult to calculate it because it is not a reliable factor) |
Private wealth |
goods owned by a person with money value (jewelry, land, etc.) |
Social wealth |
assets owned by government for the benefit of the general public |
The national wealth |
the total amount of wealth owned by general public and government |
The national wealth
The national wealth = private wealth + social wealth |
Income
Income |
is measured as a flow of earnings over time; can be measured only over time not at a specific point |
Disposable income
Disposable income |
income after taxation; person can choose how to dispose it |
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higer income tax = lower disposable income |
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higher disposable income = higher consumer expenditure |
Sources of income
Human wealth produces earned income |
better education = better income |
Non-human wealth produces unearned income |
interest, rent, lottery, inheritance, etc. |
Earned income |
income gained from employment (wages, salaries, bonuses, comissions, etc.) |
Unearned income (passive income) |
not related to employment; from another source |
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The distribution of wealth
Reasons for differences |
Inheritance |
creates large wealth gap |
Savings and investments |
increases ones wealth |
Self-made wealth |
invention/development of new products |
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prediction of the future |
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ownership/discovery of natural resources |
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luck |
Today's trends
Women are working in high-paying jobs and own assetes |
Increase in home ownership (high prices of real estate increases the wealth) |
Both are reasons why distribution of wealth is not as unequal as in the past
Reducing wealth inequalities
Pre-distribution policies |
education, skills, characteristics, training, etc. (it is difficult to calculate it because it is not a reliable factor) |
Post-distribution policies |
tax, benefits form the government, etc. |
Taxes
Inheritance tax |
tax disposed on wealth imposed at death; at time of death a certain percentage is taken away |
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Slovakia's tax system doesn't include inheritance tax |
Wealth tax |
people with holdings of wealth are paying each year a special tax; this is one of the reasons rich people flee the country they live in |
Other methods |
better education, owning of real estate, owning of busnisses |
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The worlds distribution of income
richer (developed) and poorer (less developed) countries |
Measuring the standard of living in a country
GDP per capita |
the total money value of all Gs & Ss produced ina a country in a year; also equal to the national income of the country |
Real GPD |
measures an economy's total Gs & Ss in a given year, taking into account changes in price levels |
Nominal GDP |
measures an economy's total Gs & Ss in a year given the current prices, without adjustments for inflation |
Why is GDP per capita sometimes incorrect
It doesn't take into account political or cultural freedom. |
It doesn't categorize countries based on their education or healthcare. |
It excludes unpaid work - charities, etc. |
It ignores the impact of economical development. |
It takes into account little information about private wealth. |
Development indicators
HDI (human development index) |
provides wider measure of living standards and economic welfare than real GDP per capita |
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it combines 3 diffrenet measures |
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