Reality is unimportant. Is perception that matters to society.

And here's the definition of wealth:

I also use a more restricted concept of wealth, which I call “non-home wealth.” This is defined as net worth minus net equity in owner-occupied housing (the primary residence only). Non-home wealth is a more liquid concept than marketable wealth, since one’s home is difficult to convert into cash in the short term. Moreover, primary homes also serve a consumption purpose besides acting as a store of value. Non-home wealth thus reflects the resources that may be immediately available for consumption expenditure or various forms of investments.

But more to the actual point. To the extent a concept of “paper wealth” exists it should be confined to things that are genuinely unable to be converted into real money at all. For example stock options in a seed stage company are genuinely illiquid and may never be worth anything ever to anyone.

People living in a million dollar house and saying it’s not really wealth and shouldn’t count sound pretty out of touch to the rest of the world that doesn’t get to live in a million dollar house.

A farmer builds up a flock of sheep or a herd of cows, and everyone in the village is richer. A miller builds a water mill and everyone in the village gets bread. A blacksmith builds a forge and everyone in the village now has access to metal items.

Wealth is not a zero-sum game.

If you sell your house the only option is to re-enter the housing market through a different, equally expensive, door. You can't repurpose the money for any other purpose.

The only time it becomes "wealth" is when parents die, leaving their children with a suddenly valuable asset.

For example if you own your home outright, your living costs will be substantially lower than someone who has to rent or has a mortgage. In other words having wealth allows you to substantially lower the income you need for the same standard of living. This argument doesn't account for wealth at all as I'm reading it.

I also disagree with pg's assessment; I find it hard to imagine peoples minds defaulting to thinking of percentage of income earned (what does that even mean?) over percentages of money and stuff owned.

Yes, labor is how wealth is produced, but in a sense, an individual's labor is more than that: a person's unrealized wealth is the discounted future value of their lifetime income minus necessary survival expenses. That's not a constant number - it depends on the individual's choices, but nevertheless, that is some number. And that number has some associated optionality.

If we increase the price of houses, the optionality associated with that future stream of earnings decreases, and therefore I believe that wealth has actually been transferred (since the optionality of the homeowner increases)

It’s like saying a farmer is wealthy because he owns a tractor and a plot of land. Absolutely asinine.

the meaning of wealth is context-dependent and there is no universally agreed upon definition. At the most general level, economists may define wealth as "anything of value" which captures both the subjective nature of the idea and the idea that it is not a fixed or static concept.

So it seems a lot of the discussion in this thread revolves around semantics, mainly about what defines wealth.

So what exactly is your definition of wealth? I don't understand the logical basic behind your arguments.

For example: Actually, the bartender would be richer in this case. I bought money, that action alone increased my wealth the same way buying a car increases my wealth. I have something now that I didn't have before. What I do with that money is really irrelevant, in the same way that how fast I drive the car is irrelevant.

You exchanged your money for a car. You could now be wealthier in the sense that the car brings you happiness or functionality that you didn't have before, enabling you to be more productive. But what if you already owned a car and were simply indulging yourself? What if this was your 5th car that you didn't need? So you could keep on buying cars forever, and you'd be continually increasing your wealth? I don't understand why buying the car automatically makes you wealthier. If you give a hobo $10,000 to buy an hour of him walking in circles, you've increased your wealth of entertainment perhaps, but it is a stretch by any definition of wealth to say you've created it.

If I physically burned the money, sure. But the same is true if I physically burn my house down. Of course this too adds to the economy."

Assuming your house was functioning and adequate then the economy is poorer without your house. That is wealth destruction not creation. For now you have to pay for a new house. Someone has to use the materials and labor to build that house. You pay him your money to do so. Now you have less. Wealth was not created here. It was shifted around from your pocket to the construction company's.

The vast majority of wealth isn't empty houses, ever rented, and never sold.

We all understand wealth to be money, stock, ownership. So maybe the housing could come under that (if you owned your apartment) but not the others.