How Fat is the Top Tail of the Wealth Distribution?

Abstract

Standard-Nutzungsbedingungen:Die Dokumente auf EconStor dürfen zu eigenen wissenschaftlichen Zwecken und zum Privatgebrauch gespeichert und kopiert werden.Sie dürfen die Dokumente nicht für öffentliche oder kommerzielle Zwecke vervielfältigen, öffentlich ausstellen, öffentlich zugänglich machen, vertreiben oder anderweitig nutzen.Sofern die Verfasser die Dokumente unter Open-Content-Lizenzen (insbesondere CC-Lizenzen) zur Verfügung gestellt haben sollten, gelten abweichend von diesen Nutzungsbedingungen die in der dort genannten Lizenz gewährten Nutzungsrechte. The HFCN collects household-level data on households' finances and consumption in the euro area through a harmonised survey. The HFCN aims at studying in depth the micro-level structural information on euro area households' assets and liabilities. The objectives of the network are: Terms of use: Documents in1) understanding economic behaviour of individual households, developments in aggregate variables and the interactions between the two;2) evaluating the impact of shocks, policies and institutional changes on household portfolios and other variables;3) understanding the implications of heterogeneity for aggregate variables; 4) estimating choices of different households and their reaction to economic shocks; 5) building and calibrating realistic economic models incorporating heterogeneous agents; 6) gaining insights into issues such as monetary policy transmission and financial stability.The refereeing process of this paper has been co-ordinated by a team composed of Gabriel Fagan (ECB), Pirmin Fessler (Oesterreichische Nationalbank), Michalis Haliassos (Goethe University Frankfurt), Tullio Jappelli (University of Naples Federico II), Sébastien PérezDuarte (ECB), Jiri Slacalek (ECB), Federica Teppa (De Nederlandsche Bank), Peter Tufano (Oxford University) and Philip Vermeulen (ECB).The paper is released in order to make the results of HFCN research generally available, in preliminary form, to encourage comments and suggestions prior to final publication. The views expressed in the paper are the author's own and do not necessarily reflect those of the ESCB. AcknowledgementsI would like to thank the members of the HFCS network for many stimulating discussions. I also thank Jirka Slacalek and an anonymous referee for useful comments. Any remaining errors are solely mine. The views expressed in this paper only reflect those of the author. They do not necessarily reflect the views of the European Central Bank. Philip VermeulenEuropean Central Bank; e-mail: philip.vermeulen@ecb.europa.eu AbstractThe US Survey of Consumer Finances (SCF) and the Eurosystem's Household Finance and Consumption Survey (HFCS) provide evidence that wealth is heavily concentrated at the upper tail of the wealth distribution. A commonly cited number for the US is that 1 percent of the households hold 30 percent of total household wealth. I investigate the reliability of upper tail wealth estimates from household wealth surveys in the presence of survey differential non-response, i.e. ...

Charting the Development of Wealth Inequality in the Netherlands since 1950: an On-going Quest

“…In case of indications of differential non-response problems that cannot be tackled by oversampling the wealthiest, he suggests to combine survey data with the information from these 'rich lists' to check the available estimations of the tail of the wealth distribution. 50 The Dutch Gini-coefficient for the wealth distribution is already relatively high from an international point of view according to most sources (including the CBS) and it even reaches up to 0.9 if we attach more importance to the data from for example Quote 500 or the Dutch Wealth Report. 51 On the other hand, such lists might also be overestimating other components of wealth (such as the value of enterprises) and underestimating debt.…”

Intergenerational Transfers and Wealth in the Euro-Area: The Relevance of Inheritances and Gifts in Absolute and Relative Terms

“…Additionally, not all countries in the HFCS oversample wealthy households. Therefore, our analysis for most countries is likely not representative for the very top (Vermeulen 2014). To account for missing values, the data is multiply imputed (five implicates) by the data providers (ECB 2013b).…”

Estimating the Top Tail of the Wealth Distribution

“…Vermeulen (2014) shows how to deal with the differential non-response problem. A Pareto tail is estimated to approximate the tail of the wealth distribution.…”

“…Therefore such a simple multiply by a factor method initially corrects 'too much'. Third, estimate the Pareto tail on this 'underreporting adjusted survey', using the regression method as in Vermeulen (2014). A net wealth level has to be fixed where the tail starts.…”

“…These problems have to be addressed when using these surveys to estimate top wealth shares. Vermeulen (2014) in the survey. Those countries however have a considerable number of billionaires.…”