It's a fairly simple question, and I consider myself reasonably intelligent, but when presented with this question, it stopped me in my tracks. I started taking into account all the things it might mean and now I'm not certain there is a specific answer. Anyone care to take a shot at it?
It also is related to where on the planet you are. $500K in net worth isn't much in Boston, much more in western China.
A mundane definition would make a distinction between income and therefore the difference between a stock and a flow. However, within the social sciences it gets a little complicated when referring to anything that isn't pecuniary in nature. We shift to an understanding of the non-poor with the threshold determined by numerous non-income characteridtics (e.g. Social capital doesn't directly enter the utility function, but can impact on wealth perceptions)
That being the case where anything with trade value is considered wealth, can I include my skills and experience in what I should consider my personal wealth?
Being that the value of the same amount in two places may be actually worth a great deal more in one place than another, can that value be wealth in only one, would it have to be wealth in both or is there something else me must factor in that would prevent it from being wealth in either?
I can easily be accused of taking the subject far out of its depth, but yes, this does seem far more complicated than iit should be. The thing is, with people talking about something so often, such as wealth, if we all don't mean the same thing then there's probably no point in having the conversation in the first place. Having said that, most of your post actually flew straight over my head. My apologies for not having enough of a proper financial education to grasp it. I am trying to learn; hence my chasing over what wealth means in the first place.
In the well-being analysis that is often determined by a consensus definition (e.g. constructing a high poverty line sufficient to escape all forms of deprivation).
Absolutely, human capital has real, trade value in the market place, is this not the essence of employment? Exchanging time and human capital for currency. Trouble is, your getting a some definitions from a few different fields because it means different things depending on who's talking about it. For instance Goldwater gave the webster definition, while I tried to give one that would typically be used by economists. Basically the concept of wealth gets pretty complicated once you move past anything other than financial or monetary possessions.
Of course the problem is that human capital is defined as anything that increases productivity. That doesn't necessarily convert into 'trade value' because of the nature of wage norms
No doubt some skills are worth more than others, I'd suspect the human capital that is most easily acquired is also the most likely to be subject to wage norms below their productive value. I'd assume the converse to be true as well.
Take two groups, equal in possesions, cost of living, opportunity, etc. and tell one group you have it good, and the other that you have been exploited. One will be happy, the other deprived, one OK, the other in poverty. Subjective.
Poverty isn't measured subjectively, it comes in two flavors, absolute and relative. From a personal perspective we tend to measure our wealth according to those around us. So even if you told person B that they were impoverished, they're likely not to believe you.
Subjective is the third flavour. The only issue is how its used. A consensus measure of poverty uses perceptions to derive a poverty threshold that is independent of ad hoc decisions of the researcher
So sort of like what I mentioned, that our personal perceptions are constructed by our observations of those around us. With that being said, do you think the media and the portrayal of the uber-rich on television constantly reshapes our opinions on our own wealth?
You could apply some Marxist analysis into the layer upon layer of false needs driven by the media machine. That helps us understand crime trends, but also can of course help us understand subjective poverty. I do note, however, that the subjective methodology tends to replicate relative poverty
I know you don't typically care for the journalistic stuff, but I read this the other day and that's what got me thinking about this. The TL;DR is that even the uber-wealthy claim not to feel financially secure and that everyone at virtually any income level will state that they'd need "a little bit more" to feel secure.
"Productive value" is what the market sets it to be. How long can a company survive without a CEO, with the right second tier management - indefinately. How long can a company survive without accounts receiving - 2 weeks, a month? Yet, the CEO is paid more than an accounting clerk. Part of the value, like the value of diamonds, is rarity. But, there is another factor. The direction provided by a good CEO like Steve Jobs, is rarely matched (and I expect Apple to devolve to just another computer company). Good managers are rare. Most of us have never worked for one. Most of the skills that make a great engineer, are weaknesses as an engineering manager. Yet, engineers are the only ones promoted to engineering management. It is the rare person that is a good engineer, and a good manager.
I disagree, the market sets the wage, a job productive value is absolute and often higher than the wage he'll receive.
In terms of the impact of income we could refer to adaptation effects on happiness. Simply put, we're happy when we get more but the effects soon wear off. Its more difficult with wealth though! Take something like home ownership. A home owner is more likely to be content, but also more likely to have mental problems (arguably because the relationship between income and debt isn't straight forward)
Why is the productive value of a job higher than the wage? Rent. Some would go so far as to call it exploitation.
