ArtsAutosBooksBusinessEducationEntertainmentFamilyFashionFoodGamesGenderHealthHolidaysHomeHubPagesPersonal FinancePetsPoliticsReligionSportsTechnologyTravel

How is Wealth Measured?

Updated on December 3, 2011
Read this hub on your iPhone!
Read this hub on your iPhone!

How Wealth Is Measured

The concept of wealth as a stock of a great variety of useful things raises the question of how wealth can be measured other than by listing all such things.

Since they are heterogeneous they cannot be added to form a single total. Care has been taken, however, at least in the narrower definition, to restrict the things included in wealth to those which are bought and sold. Thus wealth can be measured as the sum of money values. A money valuation is particularly appropriate for assessing the quantity of wealth in a single total because prices measure the marginal utilities of different goods. The marginal utility of any particular goods is the increase in total satisfaction yielded by one additional unit of the good. For expressing in homogeneous terms the heterogeneous satisfactions yielded by different goods, prices provide a basis for assigning a meaningful relative importance to the various categories of wealth.

Money Value of Wealth Stock

To estimate accurately the money values of the wealth stock presents many difficulties. The value of an item of wealth may be viewed in two ways. First it can be thought of as the price which can be received for the use of the item for a restricted period of time, say a year, the item to be returned intact; or, second, as the purchase price which gives the buyer the right to use or otherwise dispose of the services of the item for the entire period of its usefulness. These two values are closely related. The purchase price, which is what is usually meant by the value of an item of wealth, is, excluding sentimental factors, nothing more than a present value assigned to an estimate of the use value of the item for the period of its usefulness. Any present value of future services involves discounting these anticipated services at a current interest rate. Sales values of wealth are thus seen to be reflections of anticipated service values.

Book Value and Current Market Value

If each item of wealth was sold currently, the prices (market values) thus established could be taken as appropriate values. This seldom happens. It becomes necessary, therefore, to assign to the stock not sold the prices secured for the units that were recently transferred. For some items of wealth such as public roads, parks, or even many factory buildings, no representative items are transferred, so that some appraised or book value must be assigned. Book values are usually original purchase price values and these may be quite different from either the current costs of producing a similar item or the price at which the item could be bought or sold. Where marketable instruments such as stocks and bonds exist as ownership claims against the property, the market values of such instruments constitute still another basis for valuing wealth.

Current practice in wealth estimating is to secure, as nearly as possible, current market value. Even if these are obtained the task is only half over if time comparisons are to have any significance. Since the value of money changes, wealth measured in money values would not tell us whether the total of substantive wealth (useful resources) had increased or decreased in quantity. To answer this question we would have to express the totals in dollars of constant purchasing power. For this reason historical estimates of wealth often have only limited usefulness unless they provide the information by which they can be made comparable, namely, constant price valuations.


    0 of 8192 characters used
    Post Comment

    No comments yet.


    This website uses cookies

    As a user in the EEA, your approval is needed on a few things. To provide a better website experience, uses cookies (and other similar technologies) and may collect, process, and share personal data. Please choose which areas of our service you consent to our doing so.

    For more information on managing or withdrawing consents and how we handle data, visit our Privacy Policy at:

    Show Details
    HubPages Device IDThis is used to identify particular browsers or devices when the access the service, and is used for security reasons.
    LoginThis is necessary to sign in to the HubPages Service.
    Google RecaptchaThis is used to prevent bots and spam. (Privacy Policy)
    AkismetThis is used to detect comment spam. (Privacy Policy)
    HubPages Google AnalyticsThis is used to provide data on traffic to our website, all personally identifyable data is anonymized. (Privacy Policy)
    HubPages Traffic PixelThis is used to collect data on traffic to articles and other pages on our site. Unless you are signed in to a HubPages account, all personally identifiable information is anonymized.
    Amazon Web ServicesThis is a cloud services platform that we used to host our service. (Privacy Policy)
    CloudflareThis is a cloud CDN service that we use to efficiently deliver files required for our service to operate such as javascript, cascading style sheets, images, and videos. (Privacy Policy)
    Google Hosted LibrariesJavascript software libraries such as jQuery are loaded at endpoints on the or domains, for performance and efficiency reasons. (Privacy Policy)
    Google Custom SearchThis is feature allows you to search the site. (Privacy Policy)
    Google MapsSome articles have Google Maps embedded in them. (Privacy Policy)
    Google ChartsThis is used to display charts and graphs on articles and the author center. (Privacy Policy)
    Google AdSense Host APIThis service allows you to sign up for or associate a Google AdSense account with HubPages, so that you can earn money from ads on your articles. No data is shared unless you engage with this feature. (Privacy Policy)
    Google YouTubeSome articles have YouTube videos embedded in them. (Privacy Policy)
    VimeoSome articles have Vimeo videos embedded in them. (Privacy Policy)
    PaypalThis is used for a registered author who enrolls in the HubPages Earnings program and requests to be paid via PayPal. No data is shared with Paypal unless you engage with this feature. (Privacy Policy)
    Facebook LoginYou can use this to streamline signing up for, or signing in to your Hubpages account. No data is shared with Facebook unless you engage with this feature. (Privacy Policy)
    MavenThis supports the Maven widget and search functionality. (Privacy Policy)
    Google AdSenseThis is an ad network. (Privacy Policy)
    Google DoubleClickGoogle provides ad serving technology and runs an ad network. (Privacy Policy)
    Index ExchangeThis is an ad network. (Privacy Policy)
    SovrnThis is an ad network. (Privacy Policy)
    Facebook AdsThis is an ad network. (Privacy Policy)
    Amazon Unified Ad MarketplaceThis is an ad network. (Privacy Policy)
    AppNexusThis is an ad network. (Privacy Policy)
    OpenxThis is an ad network. (Privacy Policy)
    Rubicon ProjectThis is an ad network. (Privacy Policy)
    TripleLiftThis is an ad network. (Privacy Policy)
    Say MediaWe partner with Say Media to deliver ad campaigns on our sites. (Privacy Policy)
    Remarketing PixelsWe may use remarketing pixels from advertising networks such as Google AdWords, Bing Ads, and Facebook in order to advertise the HubPages Service to people that have visited our sites.
    Conversion Tracking PixelsWe may use conversion tracking pixels from advertising networks such as Google AdWords, Bing Ads, and Facebook in order to identify when an advertisement has successfully resulted in the desired action, such as signing up for the HubPages Service or publishing an article on the HubPages Service.
    Author Google AnalyticsThis is used to provide traffic data and reports to the authors of articles on the HubPages Service. (Privacy Policy)
    ComscoreComScore is a media measurement and analytics company providing marketing data and analytics to enterprises, media and advertising agencies, and publishers. Non-consent will result in ComScore only processing obfuscated personal data. (Privacy Policy)
    Amazon Tracking PixelSome articles display amazon products as part of the Amazon Affiliate program, this pixel provides traffic statistics for those products (Privacy Policy)