Wealth as Control of the Future

Authors:

Robert Manduca, University of Michigan, Ann Arbor

Abstract:

Wealth inequality has become a major focus of social research in recent years. This research has yielded breakthroughs in describing the present distribution of wealth holdings, the impacts that access to wealth has on life trajectories, and the strong connections between wealth in the present and events in the past. However, wealth inequality scholars have yet to fully explore the relationship between wealth in the present and events in the future. Drawing on insights from financial accounting and asset pricing, this paper describes how expectations about future events are fundamental in determining the prices of assets and thus the present net worth of individuals. It then demonstrates how a “future-oriented” perspective on wealth can help resolve ongoing debates in the wealth literature, including the question of how to incorporate government social insurance programs when calculating personal net worth and the apparent puzzle of high levels of wealth inequality in countries that are otherwise economically egalitarian.