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Capital and Wealth in the Twenty-First Century

Author

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  • David N. Weil

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.

Suggested Citation

  • David N. Weil, 2015. "Capital and Wealth in the Twenty-First Century," American Economic Review, American Economic Association, vol. 105(5), pages 34-37, May.
  • Handle: RePEc:aea:aecrev:v:105:y:2015:i:5:p:34-37
    Note: DOI: 10.1257/aer.p20151057
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    References listed on IDEAS

    as
    1. Thomas Piketty, 2011. "On the Long-Run Evolution of Inheritance: France 1820--2050," The Quarterly Journal of Economics, Oxford University Press, vol. 126(3), pages 1071-1131.
    2. James M. Poterba, 2014. "Retirement Security in an Aging Population," American Economic Review, American Economic Association, vol. 104(5), pages 1-30, May.
    3. James M. Poterba, 2014. "Retirement Security in an Aging Society," NBER Working Papers 19930, National Bureau of Economic Research, Inc.
    Full references (including those not matched with items on IDEAS)

    Citations

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    Cited by:

    1. Gianni La Cava, 2016. "Housing prices, mortgage interest rates and the rising share of capital income in the United States," BIS Working Papers 572, Bank for International Settlements.
    2. Peter Mihalyi & Iván Szelenyi, 2016. "Two different sources of inequalities: profits and rents in advanced market economies," IEHAS Discussion Papers 1630, Institute of Economics, Centre for Economic and Regional Studies, Hungarian Academy of Sciences.
    3. Luca Zamparelli, 2017. "Wealth Distribution, Elasticity of Substitution and Piketty: An ‘Anti-Dual’ Pasinetti Economy," Metroeconomica, Wiley Blackwell, vol. 68(4), pages 927-946, November.

    More about this item

    JEL classification:

    • E22 - Macroeconomics and Monetary Economics - - Consumption, Saving, Production, Employment, and Investment - - - Investment; Capital; Intangible Capital; Capacity
    • E23 - Macroeconomics and Monetary Economics - - Consumption, Saving, Production, Employment, and Investment - - - Production
    • E25 - Macroeconomics and Monetary Economics - - Consumption, Saving, Production, Employment, and Investment - - - Aggregate Factor Income Distribution
    • O41 - Economic Development, Innovation, Technological Change, and Growth - - Economic Growth and Aggregate Productivity - - - One, Two, and Multisector Growth Models
    • O47 - Economic Development, Innovation, Technological Change, and Growth - - Economic Growth and Aggregate Productivity - - - Empirical Studies of Economic Growth; Aggregate Productivity; Cross-Country Output Convergence
    • P16 - Economic Systems - - Capitalist Systems - - - Political Economy of Capitalism

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