Wealth and partial wealth : measurement approaches for economic and subjective well-being

The currently discussed increase in inequality within many countries arise not only from higher poverty rates but also from the growing population at the upper end of the distribution and the resulting tensions between rich and poor. The rise of wealth in several dimensions was coming back as an issue for quality-of-life applications. Although achieving comfortable living conditions is a common goal, the shape of the distributions may have direct impacts on well-being, even for the broad majority of the population that does not fall into the high-wealth category. This is because most people below the wealth line experience at least some degree of prosperity, which I refer to here as partial wealth.The major innovation in the measurement approach proposed here lies in the framework of partial wealth. The partial wealth approach offers a parameter-based measure to model degrees of wealth as a counting approach for fuzzy areas of prosperity. It can be integrated into a generalized FGT-measure of wealth. The proposed methods for considering wealth can be applied to any wealth concept, including multidimensional settings. The empirical applications used in this paper refer to economic wealth (income and assets) and subjective wealth (satisfaction).