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Wealth is defined as assets held by an individual or household. These assets may include financial wealth such as savings accounts, stocks, or bonds as well as property such as the family home, farm or business. Some estimates of household wealth also include consumer durables such as vehicles and refrigerators.
Wealth is an important dimension of stratification because property can be passed down from generation to generation. Families use accumulated assets or savings to bridge interruptions in income, preventing downward social mobility. In spite of its importance, sociologists tend to leave wealth out of their measures of socioeconomic status, because of the difficulties in obtaining valid and reliable data on household assets. This is particularly true when engaged in cross-cultural research, because economic assets vary tremendously and are defined differently for different countries. Using the data that are available, sociologists and economists have determined that in general, the distribution of wealth varies a lot, but is far more unequal than the distribution of income. The USA exhibits the highest levels of wealth inequality in the developed world.
For economists, wealth represents income that is saved rather than being spent on daily necessities or consumer desires. Of course not all individuals are equally able to save. The accumulation of assets is extremely difficult for the poor and working poor because nearly all of their income goes to fulfill daily needs. In most ”third world” countries (and some in the ”second world”) household needs are not subsidized by their employer through medical or child care benefits.
Recent economic indicators suggest that more and more American families are having trouble saving a portion of their incomes. Net household liabilities have exceeded net asset accumulation in the USA since 1999, which means that Americans are not only failing to accumulate wealth, they are accumulating personal debt at unprecedented rates. Decreasing home values and stock prices means that even wealthy Americans, as are individuals in other countries, are experiencing a decrease in net worth. Some research indicates that US households in the bottom quintile have no wealth at all, and a large portion of these have negative wealth (i.e. debt). These experiences are being reproduced in other ”first world” countries.
Throughout history, various government initiatives have sought to encourage the acquisition of wealth for some households. These programs have enabled many families to secure home ownership and save for retirement. Unfortunately, many of these government subsidies have benefited the wealthy class far more than other groups, resulting in a large wealth gap typically patterned by race and ethnicity. For example, on average, African American households possess only eight cents in wealth for every dollar possessed by white families. This disparity persists, even though the income gap between African American and white households has shrunk. African American households are also more likely to possess wealth in the form of residential property than in a more liquid form such as stocks or bonds. These disparities exist in countries around the world, although some are based on economic (or political) status rather than race/ethnicity.
- Collins, C. & Yeskel, F. (2000) Economic Apartheid in America: A Primer on Economic Inequality and Insecurity. New Press, New York.
- Keister, L. (2000) Wealth in America: Trends in Wealth Inequality. Cambridge University Press, New York.
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