To a common man means riches. Riches mean huge cash, gold, silver, diamond, building, shares, property etc. But in economics wealth has a different meaning. In economics, wealth means all goods having exchange value. In other words, wealth is a stock of economic goods existing at a given time.
According to Silverman,
“Wealth is that which possess utility, scarcity and transferability.”
Professor J. L. Hansen said that wealth is a stock of goods existing at a certain time that conform to the following requirements they must possess utility, they must have money value, they must be limited in supply with transfer of ownership. Anything to be regarded as wealth must possess four characteristics.
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1. Utility:
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Anything to be classed as wealth must be capable of satisfying a human want. As we know they want satisfying quality of a good is called its utility. Some goods have utility but they are not useful.
For example, wine or tobacco. They can satisfy a human want. But both of them are not useful rather they are harmful. So wine or tobacco is wealth in economics.
2. Scarcity:
We know that free goods have utility. But they are unlimited in supply in relation to demand. So free goods do not have exchange value. So free goods are not wealth in economics.
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Scarcity means limited in supply in relation to demand. One has to pay a price to possess it. So only economic goods are wealth because they are scarce and we pay a price to purchase them.
3. Marketability:
Another characteristic of wealth is marketability. Goods, which are marketable, are included in wealth. A thing is said to be marketable if the ownership of that thing can be transferred from one hand to another hand.
A good is marketable if it is transferable. Land, building and other tangible goods are marketable because ownership of such things can be shifted from one person to another.
On the other hand, personal qualities, natural abilities, beauty, honesty, talent of a poet etc. are lot wealth in economics because they cannot be separated from their owners. These are personal attributes.
4. External possession of man:
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It is another important characteristic of wealth. Anything which is an external possession of man is transferable. The skill of a doctor, the teaching ability of an outstanding teacher, the tone of a singer, the skill of a painter etc. are not wealth because they are internal attributes. It is not possible to transfer such attributes to others.
So anything to be regarded as wealth must conform all the characteristics discussed above. In brief, we can tell that all economic goods are wealth.