Why is wealth far more unequal than income?

Wealth is far more unequal than income because wealth piles up while income only flows. Income is what comes in, like a salary. Wealth is net worth: everything a person owns minus everything they owe. Researchers who study the world's distribution of wealth say it is much more unequal than the distribution of income.

Here is why the two can drift apart. Picture a person with a big income who also has big expenses. Whatever they earn, the net effect on their wealth could be small or even negative. Meanwhile, owning things lets people get richer without a bigger paycheque: wealth gives security, prestige and political power, and it can be used to obtain more wealth. What you own today builds on what you owned yesterday.

The numbers are striking. In many societies the richest ten percent control more than half of all wealth. The OECD estimated in 2012 that the richest 0.6 percent of the world's people held 39.3 percent of world wealth, while the bottom 95 percent held only 28.4 percent. On the Gini scale (the standard inequality score from 0 to 1, the subject of the next step), those figures correspond to 0.893, close to the maximum.

Inequality in what people own has an old history. Archaeologists, who cannot read pay slips from thousands of years ago, treat big houses as the homes of wealthy households and compare house sizes across a village or a town. Even in the distant past, the spread of what people owned was not the same everywhere.