Definition
Wealth distribution describes how the total stock of net worth in an economy — homes, financial assets, businesses, and other property, minus debts — is divided among its households. It differs from income distribution, which measures the flow of earnings over a period rather than the accumulated stock of assets.
Wealth is almost always distributed far more unequally than income, because assets compound over time and can be passed between generations.
Why it matters
How it works
Wealth accumulates through saving, asset appreciation, and inheritance, while it is reduced by spending, taxes, and debt. Because returns on assets compound, those who already hold wealth can grow it faster than those starting from nothing — a tendency that widens gaps unless countervailing forces intervene.
Governments influence the distribution through progressive taxes, estate and capital taxes, public education, and transfer programs. How aggressively to use these tools is a central, contested question, with views ranging from market-led approaches to the redistributive aims of socialism.