Definition and measurement

There are many ways of defining wealth. As the main interest here is in distributional issues, the focus is on the commonly used concept of net worth, which measures the value of all non-human assets, less liabilities (debt). Such assets comprise financial assets (such as deposit accounts, stocks, bonds, mutual funds, life insurance and pensions) and non-financial ones (main residence, property investment, collectibles and businesses). Debts refer both to secured debt (mortgages and home loans) and to unsecured debt (personal loans, educational loans and credit card debt). But the problem lies not so much in defining wealth or net worth, as in measuring it.[1]

[1] Many current net worth definitions seem to be data driven, but are not consistently used across studies (Sierminska, 2005).