American Economic Review
ISSN 0002-8282 (Print) | ISSN 1944-7981 (Online)
Capital and Wealth in the Twenty-First Century
American Economic Review
vol. 105,
no. 5, May 2015
(pp. 34–37)
Abstract
In Capital in the Twenty-First Century, Thomas Piketty uses the market value of tradable assets to measure both productive capital and wealth. As a measure of wealth this is problematic because it ignores the value of human capital and transfer wealth, which have grown enormously over the last 300 years. Thus the constancy of the wealth/income ratio as portrayed in his data is an illusion. Further, the types of wealth that he does not measure are more equally distributed than tradable assets. The approach also incorrectly identifies capital gains due to reduced discount rates as increases in the capital stock.Citation
Weil, David N. 2015. "Capital and Wealth in the Twenty-First Century." American Economic Review 105 (5): 34–37. DOI: 10.1257/aer.p20151057Additional Materials
JEL Classification
- E22 Investment; Capital; Intangible Capital; Capacity
- E23 Macroeconomics: Production
- E25 Aggregate Factor Income Distribution
- O41 One, Two, and Multisector Growth Models
- O47 Empirical Studies of Economic Growth; Aggregate Productivity; Cross-Country Output Convergence
- P16 Capitalist Systems: Political Economy