Dewett – 41/44

• In ordinary language, “ WEALTH” conveys an idea of prosperity and abundance. It means riches, prosperity etc. • A man of wealth is a rich man, ie one who is prosperous. • But in Economics, money is not the only form of wealth. • Anything which has value is called Wealth in Economics.

• In economics the term “Wealth” is synonymous with economic goods. Economic goods are scarce and command a price in the market • But scarcity alone does not make a good wealth, if it is a useless thing. Eg is a rotten egg. No body would like to have it and it will not be wealth. It is wealth only if a man needs it and uses it. Therefore, besides being scarce, a commodity must have utility. • Even a harmful thing will be regarded as a wealth provided it possesses utility and can satisfy a want. • Further, the idea of ownership is also present in wealth. This means that unless an article can be owned and is capable of being transferred from one owner to another, it cannot be regarded as wealth

3 attributes of WealthAsk 3 questions
• If all the answers are affirmative, it is wealth. • A negative to any one question will exclude it from the category of wealth. • For instance, a thing possess utility but not scarce and vice versa. It must be scarce, useful and also transferable. Is it transferable? Can it satisfy a human want? Does it possess Utility?

Is it scarce?

Examples of wealth
• Applying these tests, we find that money, land, buildings, furniture, machinery, clothes, gold, silver are wealth • Free goods like fresh air, water and sunshine are not wealth unless they become scarce as in big cities • Personal qualities like honesty, skill, ability and intelligence too are not wealth. They are source of wealth but are not wealth in themselves because they are not transferable. • Oceans, sun, moon are not wealth as they cannot be owned or bought or sold.

• MONEY is wealth • It possess UTILITY • It is SCARCE • And it is TRANSFERABLE

• Income is what wealth yields • A man may possess a number of immovable properties worth of Rs 50 lakhs. But how much does he get from it in a year? Perhaps Rs 10,000/-. This is income • WEALTH IS A FUND AND INCOME IS A FLOW

• Both are closely inter related • Wealth is the means and welfare the end. • Wealth promotes mental, moral and physical well being of the people. • But, what is regarded as wealth by economists may not necessarily be good and useful. It may be harmful even. Eg tobacco, opium, wine, drug, bad book etc. these wealth does not promote human welfare? • Increase in wealth does not mean an increase in welfare. It only means that people have possessed more economic good where as the number of free goods like fresh air, water which are highly desirable has decreased. We cannot claim that this state of affairs has promoted the welfare of society.

• INDIVIDUAL WEALTH. (cash, land, building, furniture, ,stock, shares, live stock etc)
NEGATIVE WEALTH This refers to the debts owned by individuals or states •

PERSONAL WEALTH (skill, ability, intelligence

COSMOPOLITAN WEALTH It includes the wealth of all countries- ie whole world.

SOCIAL OR COMMUNAL WEALTH Things owned by society- road, dam Canals, railways, public park, libraries, Municipal building etc NATIONAL WEALTH.

• Aggregate of all wealth of All citizens • It may also include rivers, mountains Good govt, good climate, high character of people

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