What is Wealth? – Types, Difference Between Gross and Net Wealth, More
What is Wealth?
Wealth is linking to profusion. The most common use of the term mentions owning many things of material value, such as property or money. On the other hand, this same notion can express a fortune on a symbolic level, as occurs when speaking of spiritual wealth.
Material wealth, therefore, is the possession or control of numerous goods and assets. Said create when a productive or commercial process generates more money. It was initially used as an investment to start the project. If a subject invests one hundred bucks a month and earns two hundred dollars in the same period, it can be said that he obtains a profit of one hundred bucks a month, which is a careful part of his wealth.
Types of Wealth
Wealth can measure from an economic point of view, but it can also measure from a moral, social or anthropological point of view. And it is that is a concept that can have many meanings.
For this reason, we can highlight that there are other types of wealth, such as the following:
- Financial or economic
- Social wealth or personal
All of them refer to the abundance of resources that said person shows in the fields to which the type of in question refers.
Difference Between Gross Wealth and Net Wealth
Wealth, in the field of economics, define as the set of assets, but also rights and obligations, owned by a natural or legal person, private or public.
For this reason, just as it includes assets, also includes assets that have to acquire with liabilities.
Therefore, when talking about gross wealth, we are talking about the sum of all the elements, including, among these, also those that have to acquire with liabilities.
However, when we want to know the that said person possesses, without including those debts that computer in negative, this calculates through net wealth. The gross subtract the liabilities representing the debts and obligations with third parties.
In this way, we will know what net wealth that person has.
Example of Wealth
Among the examples of wealth, we present a model of the economics below.
In this sense, let us imagine that we have an individual who owns a property worth 1 million dollars, together with assets summarized in the said home’s value, and an amortized vehicle that has a book value of 25,000 dollars.
How is Wealth Measured?
If we need to measure a person’s, it is enough to calculate what we know as their assets. In this sense, the sum of all his assets, both tangible and intangible, represents, at the same time as the person’s total assets, his wealth.
However, when we talk about the generation to measure for territory or country, this measurement must carry out through indicators such as GDP or GDP per capita, representing the generation of homogeneously of a population.
In turn, indicators such as national use, and another series of hands try to measure the heritage of a country and, therefore, its citizenship.
However, it should note that GDP (approximation of general) is a flow variable, while national is a stock variable.
Wealth in Economy
In the economic field, the notion refers to the set of assets possesses. Its being, whether natural or legal, private or public and, as such, is intended by adding the total value. In this sense. The idea of agreeing to the stock or fund that a person possesses at an exact period.
In this sense, if we speak about a nation, we can say that its wealth comprises. All the goods, services, factors of production and natural resources it has, including its substructure.
On the other hand, if we talk around a person, his comprises the total amount of his possessions (real estate, machinery, financial assets, etc.). well as the set of insubstantial assets (studies, acquaintance, skills) that he holds, and that have a monetary value in the market.
Natural wealth includes both the profusion and variety of natural (water, mineral, forest, etc.) and biological (flora and fauna) capitals and climatic conditions and factors. Is related to respite or scenery, which a nation possesses within the limits of its territory.
As such, nature has real economic potential for a country’s economic and social development, for which responsible use and conscious exploitation of this resource can, in turn, generate for a nation. Ecological tourism, agriculture, energy making (oil, hydroelectric and wind power, etc.) are some of the possibilities. It can consider exploiting nature, long as it is done within a framework of sustainable development. That does not imperil the balance of environmentally friendly or depletes natural resources.
Cultural wealth refers to the diversity of tangible and intangible assets that establish. Its knowledge, traditions, customs, ways of life, gastronomy, artistic expressions, technical and industrial expertise, etc., characterize a society or a human group and have been developing throughout centuries of history.
It seems obvious. Let me start with the definitions that those who work with inequality give. It is the total sum of all the assets you own (cash, houses, cars, furniture, pictures, money in the bank. It’s the value of stocks and bonds, etc.) what is called the “surrender value”. Are life insurance and similar plans less the sum of your debts? In other words, it is the sum of money you would get if you liquidated. It all your possessions today and paid all your debts. (The quantity can also be negative).
This is impossible because of what is known as the “index number problem”. There is no way to compare the fortunes of goods and services. That is radically different. If I can listen to a billion songs and read all night using excellent light, and if I place a high value on this, I may think I am richer than any king who lived a thousand years ago. Tocqueville also realised this when he said that the old kings lived lives of but not comfort.