Cameron Hepburn



oxford review of economic policy

Wealth is a stock, not a flow. The country with the highest flow of GDP in a particular year is not necessarily the richest country. The richest country has the highest capital stock, whether endowed or accumulated, implying a higher potential for future income and consumption. This should be obvious, yet concepts of wealth are often poorly understood or ignored. Many countries do not maintain adequate wealth accounts; those that do would admit that a great deal of work on national accounts remains to be completed. This is remarkable: investors would not accept corporate balance sheets of a quality akin to those of many countries. However, with progress on wealth accounting, including the accounting of natural wealth, this situation may be set to change, enabling the rate at which nations are becoming richer or poorer per capita to undergo popular examination. A focus on wealth, and changes in wealth, would lead to attention on investment in important assets and to sharper attention on sustainability. This paper, and this issue of the Review as a whole, provides an examination of wealth, its definition, constituent parts, geographical distribution, and change over time, and provides policy guidance on accounting and management. We also explore the degree to which successful wealth management may even make us happier.

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