Few own most of the world's assets: Study

Richest 2% of adults hold more than half of global household wealth, data reveals
Dec. 6, 2006. 01:00 AM
Olivia Ward
STAFF REPORTER

There's fierce debate about whether the rich are getting richer and the poor, poorer. But a pioneering study by the World Institute for Development Economics Research leaves no doubt the tiny fraction of the planet's population who are living in affluence own more than half of its wealth.

"The richest 2 per cent of adults in the world own more than half of global household wealth," says a study released yesterday by the Helsinki-based institute, a division of the United Nations University. "And the richest 1 per cent alone owned 40 per cent of global assets in the year 2000."

Some 37 million people worldwide have reached the top rung of the ladder, owning $500,000 (U.S.) in assets, after debts have been deducted.

"What's special about this project is that it puts personal assets into a global perspective," says University of Western Ontario economist James Davies, one of the authors. "It looks at the role of household assets and debts in relation to growth, and for the first time shows what the global distribution of assets looks like."

The study outlines the economic comfort — and discomfort — zone of people and countries by defining wealth as net worth: "the value of physical and financial assets less debts." And it says, "in this respect, wealth represents the ownership of capital."

Although the world's income gap has been amply confirmed, the gap in wealth is even more dramatic.

"Half the world has net worth per adult below $2,200," Davies says.

Not surprisingly, Canada is one of the handful of countries in which wealth is concentrated, though it is less affluent than the United States, the world's richest nation.

"Canada has 2 per cent of the wealthiest 10 per cent of people in the world," Davies points out. "As we only have 0.5 per cent of the world's population, we're right up there, and in fact, over-represented."

Canada has average per capita wealth of $89,252 and the U.S. $180,837, in terms of purchasing power. Japan, with $143,727, ranks just below the U.S.

While capital may be only a part of personal resources, "it is widely believed to have a disproportionate impact on household well-being and economic success, and more broadly, on economic development and growth," the study says.

The world's total household wealth amounted to $125 trillion in the year 2000, a sum which, averaged out, should give every adult $20,500. But in some countries, average per capita wealth was below $2,000, while the richest ranked many times higher.

Does the sharp division of the world's wealth mean that globalization has failed?

"Some people are certainly gaining from it, and others are suffering," says Davies. "We should not see globalization as necessarily reducing global inequality."