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January 01, 2010

Measuring wealth

When most of us think of wealth, we think of stocks, mutual funds, homes for households and machinery and equipment for companies. Maybe at a national level, we think of natural resources like energy, water and farmland. Is this an accurate view of wealth in the modern economy?

Dr. Mike Walden, North Carolina Cooperative Extension economist in the College of Agriculture and Life Sciences at N.C. State University, responds:

"Well, maybe 100 years ago or even 50 years ago, it was an accurate view, but no longer. Today actually most of our wealth is what's inside people. It's their skills and intellectual capabilities. Economists call this intangible wealth to contrast with tangible wealth, which is what we've described, things like machinery and equipment and natural resources. Now, indeed, there have been estimates made of wealth, and the share of each of these categories of wealth - total wealth - in countries. The current estimate for the U.S. shows that we have about 3 percent of our wealth in natural resources. We have about 16 percent of our wealth in things like equipment and technology. But a whopping 81 percent of our wealth is intangible wealth. It is in our skills and in our brains."

Posted by Dave at January 1, 2010 08:00 AM