What the latest household finance and consumption survey tells us about wealth inequality in Europe

Questions of inequality and distribution are likely to become increasingly important in the wake of the Covid-19 pandemic. Franziska Disslbacher and Patrick Mokre draw on the latest Household Finance and Consumption Survey, released in March, to shed some light on current trends in European wealth inequality

Vermögen und Reichtum in Österreich

Vermögen ist in Österreich sehr ungleich verteilt. Seit der HFCS-Vermögenserhebung der Oesterreichischen Nationalbank (OeNB) und von Wissenschaftler:innen durchgeführten Hochschätzungen lässt sich besser beziffern, wie groß die Vermögenskonzentration tatsächlich ist. Österreich steht innerhalb der Eurozone mit an der Spitze der Vermögensungleichheit. Die große Mehrheit der in Österreich lebenden Bevölkerung empfindet die bestehende Vermögensverteilung als ungerecht. Vermögensteuern sind ein Weg, die Schieflage zu reduzieren. Das reichste 1 % verfügt über rund 40 % des gesamten Nettovermögens, während die ärmere Hälfte gerade einmal 2,8 % des Nettovermögens besitzt. Die hohe Vermögenskonzentration hat negative wirtschaftliche, demokratiepolitische und ökologische Konsequenzen. Der Überreichtum kann durch Vermögenssteuern reduziert werden.In Austria, wealth is very unequally distributed. Thanks to the HFCS wealth survey conducted by the Austrian National Bank and projections by researchers, it has become easier to quantify the actual extent of wealth concentration. Regarding wealth, Austria is one of the most unequal countries in the Euro area. The vast majority of the population of Austria perceives the existing distribution of wealth as unfair. Wealth taxes are one way to reduce this imbalance. The richest 1 % owns around 40 % of the total net wealth, while the poorer half owns just 2.8 % of net wealth. High wealth concentration has negative impacts on economy, democracy, and the environment. Wealth concentration can be reduced through the introduction of wealth taxes

On Top of the Top - Adjusting wealth distributions using national rich lists

Poor coverage of the top in wealth surveys conceals the extent of wealth inequality. The literature mitigates this shortcoming by enriching survey data with rich lists and estimating the top tail with a Pareto distribution. However, recent studies rely on ad-hoc assumptions for some of the required parameters. We suggest a unified regression approach to estimate all parameters of a Pareto distribution jointly and extend our analysis with a more flexible three-parameter Generalized Pareto estimation. We introduce a new database of national rich lists (ERLDB) as an alternative to commonly used global rich lists to combine with survey data from the Household Finance and Consumption Survey (HFCS 2017). Our findings for 14 European countries show that wealth is more concentrated than surveys suggest, with almost doubling Top 1% shares in the most extreme cases. In contrast, countries with successful oversampling strategies tend to experience only minor changes in inequality metrics.Series: INEQ Working Paper Serie