Academic Article

Introduction to Wealth

Wealth is a stock, not a flow. The country with the highest flow of GDP in a particular year is not necessarily the richest country. The richest country has the highest capital stock, whether endowed or accumulated, implying a higher potential for future income and consumption. This should be obvious, yet concepts of wealth are often poorly understood or ignored. Many countries do not maintain adequate wealth accounts; those that do would admit that a great deal of work on national accounts remains to be completed. This is remarkable: investors would not accept corporate balance sheets of a quality akin to those of many countries. However, with progress on wealth accounting, including the accounting of natural wealth, this situation may be set to change, enabling the rate at which nations are becoming richer or poorer per capita to undergo popular examination. A focus on wealth, and changes in wealth, would lead to attention on investment in important assets and to sharper attention on sustainability. This paper, and this issue of the Review as a whole, provides an examination of wealth, its definition, constituent parts, geographical distribution, and change over time, and provides policy guidance on accounting and management. We also explore the degree to which successful wealth management may even make us happier.

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Academic Article

Historical wealth accounts for Britain: progress and puzzles in measuring the sustainability of economic growth

Estimates of Britain’s comprehensive wealth are reported for the period 1760–2000. They include measures of produced, natural, and human capital, and illustrate the changing composition of Britain’s assets over this time period. We show how genuine savings, GS (a year-on-year measure of the change in total capital and a claimed indicator of sustainable development) has evolved over time. Changes in total wealth are compared to alternative, investment-based measures of GS, including variants augmented with the value of exogenous technology. Additionally, the possible effects of population change on wealth, and the implications of including carbon-dioxide emissions in natural capital are considered.

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