Working out how wealthy someone is, means working out how many economic resources the person has. Wealth "is the value of all the assets owned by a household [or individual] less the value of all its liabilities at a particular point in time," the suggested definition in guidelines for the Organisation for Economic Co-operation and Development (OECD) goes. Such assets would include both financial assets, like cash or stocks, and non-financial assets, like land or real-estate.When we then subtract the total value of these assets from the total value of debts (liabilities), we come to a figure that represents wealth. This is also known as net worth. Most commonly, of course, that figure is given in terms of money. Even traditional measures of wealth, such as livestock, are given a cash value in the modern world economy.How is wealth measured?It is simple enough to calculate the difference between the value of what one owes and what one owns, but then you have to know those two figures, of course. How can we accurately determine who owns what? Though it is increasingly rare, some countries employ wealth taxes – a tax paid on some value of the assets one owns. In places where wealth is not taxed, like South Africa, there are no national records of the wealth that an individual owns, since there is no obligation to declare wealth unless it produces income, such as interest from investments. As a consequence, we have to rely on various estimates of wealth at the individual level, or summed data at the national level. Here are three of the more common methods used to measure wealth, as well as the challenges we might have in employing them.1. Survey dataOne way of coming to an estimate of individual or household wealth is to conduct a survey and to project those findings to the population at large. The National Income Dynamics Study (NIDS) - to date conducted in four waves between 2008 and 2014 - asks respondents what would be left over (or left owed) if they sold all their possessions and paid off all their debts. This figure represents their wealth. Surveys such as NIDS, when researching people’s wealth, commonly struggle to collect data from all groups of people in the correct proportions. As a European Central Bank study of household finance explained, "wealthier households tend to be more difficult to contact and less likely to respond". Unchecked, this inevitably has an impact on the results.In addition, a 2010 study on the problems of collecting data on household wealth notes: "Household surveys on wealth typically register lower response rates largely because of the sensitivity of the survey topic." People can understandably be hesitant about discussing their financial affairs. Finally, household surveys are also likely to miss out on the very, very wealthy. Since the group is so small in number relative to the rest of the population, their chances of being included in a survey are negligible.However, because of the immense fortunes of the ultra-rich, including them would clearly affect the overall picture. For example, South Africa had eight people on the 2017 Forbes’ list of billionaires, with an average net worth of approximately R39.7 billion. "With a net worth of 'only' R300 million, the richest person in the NIDS is thus well below [the] cut-off of the ultra-wealthy," a 2016 paper for the Research Project on Employment, Income Distribution and Inclusive Growth (REDI) on wealth inequality in South Africa pointed out.Surveys do often try to limit the impact of these challenges by purposely seeking out a disproportionately high number of wealthy respondents to make up for their lacklustre response rate. Alternatively, the collected data can be weighted to better reflect the real-world situation.2. Personal income tax recordsThe REDI paper used personal income tax data to estimate wealth and contrasted this to the NIDS survey data on wealth. While wealth itself is not taxed in South Africa, income from investments is. Investment income is therefore used as a stand-in for wealth. The downside of using income tax, as the author pointed out, is that we only have access to data for those who are above the threshold to pay income tax (and further, in this case, those who have investment income). In 2017, when the taxable threshold for under-65s was R75 000, 87% of the South African taxpayers were exempt from paying income tax. So income tax records wouldn’t directly tell us anything about the wealth in that group’s possession.3. National accountsA further way to get information on wealth is to look at data from national balance sheets. Balance sheets present the market value of all assets and debts held by the various sectors of the economy. The South African Reserve Bank maintains datasets that detail the country’s balance sheets. From these, we can gauge the total amount of wealth residing in private (as opposed to corporate or government) hands, but not how that wealth is distributed.To develop estimates of the distribution of wealth, the data from national accounts has to be manipulated. For example, Credit Suisse, a financial services company, starts with the assumption that the distribution of wealth is similar to the distribution of income, but adjust the data to account for the fact that wealth tends to be more concentrated at the top.What do we know about wealth in South Africa?Bearing the limitations of the available data in mind, three recent reports help to illuminate our understanding of wealth and its distribution in South Africa.Credit Suisse Wealth ReportCredit Suisse’s Global Wealth Report 2017 is based on national accounts data so they don’t have specific data on how wealth is distributed in the country. However, the authors of the report suggest that their method of using national accounts data, in conjunction with estimates based on countries whose wealth distribution is known, generates a reliable approximation in countries with imperfect data.Based on their calculations, Credit Suisse estimated that the total net wealth of South African adults amounted to US$0.8 trillion, or R9.5 trillion, in 2017. While broadly speaking the distribution is similar to the world as a whole, the large majority of South Africans (68%) was estimated to fall into the lowest wealth category. These are people with assets of less than US$10 000, or R117 000 at the current exchange rate.While there is no further breakdown within that group, the report estimated that the median wealth in South Africa was at US$5186 (or R60 900), well below the US$10 000 cut-off. At the other end of the scale, 58 000 South Africans, or 0.2% of the population, were identified as dollar millionaires, while 84 000 would belong to the top 1% of global wealth holders.Allianz Wealth ReportFinancial services firm Allianz, using data from national accounts, estimates in their Global Wealth Report 2017 that the richest 10% of South Africans owned more than 70% of net financial assets. For comparison, the average of the 53 countries included in the study was 53%. As wealth distribution data is not available for South Africa, Allianz told Africa Check that the estimate is calculated from a combination of income distribution statistics. They also employ "the average wealth-to-income ratio of all countries for which data on both income and wealth distribution are available".Also read: South Africa's official poverty numbersAnother way to look at the distribution of wealth is to compare the median wealth to the mean wealth within a country. The median figure is the literal halfway point between the richest and the poorest person in a country, and thus gives a relatively good representation of an average person’s circumstances. The mean wealth (the sum of the total wealth divided by the number of people) will be noticeably higher than the median, given that it will be inflated by the large fortunes of the very richest people in the country.The bigger the gap between the mean and the median, the more unequally wealth in a country is distributed. In South Africa, the mean wealth figure was six times the median – the maximum figure reached at the national level for any of the countries studied. For comparison, the average in the 53 countries studied was 2.5.REDI wealth inequality studyThe REDI study - which contrasted data from the NIDS survey, personal income tax as well as the national balance sheet - offered an even starker picture: one percent of South Africans were estimated to own at least half the wealth in the country and the richest 10% "at least 90-95% of all wealth".Given South Africa’s history, it is unsurprising that white South Africans were found to own a disproportionately large share of the wealth. But interestingly, "NIDS [data] also shows that the degree of inequality within the African group exceeds that for the overall population, being much higher than the level of inequality within any other racial group".The Gini coefficient for incomes in South Africa was reported as 0.7 (where 0 is total equality, and 1 is total inequality), whereas for wealth it was 0.95. (Note: While Gini coefficients aren’t strictly speaking directly comparable between countries, the most equal societies tend to have income coefficients of around 0.25.)These figures show wealth is even more concentrated among the rich than income in South Africa.Also read: Measuring the (black) middle class: What are the facts?This factsheet was researched by Markus Korhonen for Africa Check, the continent's leading fact-checking organisation. Find it on their website here.