The pattern of wealth-holding in a society.
Wealth consists of a stock of any asset that has a money value in exchange. Economists measure the distribution of wealth by sorting all members of society in order from those with no wealth to the wealthiest, then dividing that list up into equal-sized groups. The proportion of total wealth held by each group then gives an indication of the equality wealth holding. In most societies, the majority of people have only small amounts of wealth, while a few are very rich.
Strong links exist between income and wealth, but two factors distinguish them. The first, inheritance, consists of wealth passed from one generation to the next. The second focuses on the point in the lifespan of the individual. Most people begin their adult lives with little, but they accumulate wealth during their years of work. They then spend their savings during their retirement. Most individuals hold their wealth in assets not easily converted to cash—particularly homes, which account for 46 percent of all wealth, followed by interest-bearing assets and then motor vehicles.
Given the high degree of wealth inequality in the United States, administrations between 1960 and 2003 have sought to achieve a more equitable distribution. Redistribution achieves a more socially desirable distribution of wealth, and in doing so transfers wealth to the poor, who have a greater propensity to spend, thereby increasing demand. The most common method of redistribution is through the use of income and consumption taxes.
Prior to World War II, there were few attempts to redistribute wealth in the United States. In October 1942 Roosevelt imposed a progressive income tax—one that taxes the rich more than the poor. Such taxes continue to form the mainstay of wealth redistribution efforts, together with programs to alleviate poverty.
