How Fat is the Top Tail of the Wealth Distribution?

Differential unit non‐response in household wealth surveys biases estimates of top tail wealth shares downward. Using Monte Carlo evidence, I show that adding only a few extreme observations to wealth surveys is sufficient to remove the downward bias. Combining extreme wealth observations from Forbe...

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Bibliographic Details
Published inThe Review of income and wealth Vol. 64; no. 2; pp. 357 - 387
Main Author Vermeulen, Philip
Format Journal Article
LanguageEnglish
Published Oxford Blackwell Publishing Ltd 01.06.2018
Subjects
Bias
Body fat
Consumption
D31
Economic theory
Euro
Finance
Household Finance and Consumption Survey
non‐response
Polls & surveys
Survey of Consumer Finances
Wealth and Assets Survey
Wealth distribution
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Summary:Differential unit non‐response in household wealth surveys biases estimates of top tail wealth shares downward. Using Monte Carlo evidence, I show that adding only a few extreme observations to wealth surveys is sufficient to remove the downward bias. Combining extreme wealth observations from Forbes World's billionaires with the Survey of Consumer Finances, the Wealth and Assets Survey, and the Household Finance and Consumption Survey, I provide new improved estimates of top tail wealth in the United States, the United Kingdom, and nine euro area countries. These new estimates indicate significantly higher top wealth shares than those calculated from the wealth surveys alone.
Bibliography:I would like to thank the members of the HFCS network for many stimulating discussions. I also thank Jirka Slacalek, Dimitrios Christelis, Markus Grabka, Anthony Shorrocks, Thomas Piketty, Daniel Waldenström, three anonymous referees, Prasada Rao (Editor), participants at the Household Wealth data and Public Policy Conference, SEEK 2014, IEAA 2014, and EEA2014 for useful comments. Many thanks to Samuel Skoda for research assistance. This paper uses data from the Eurosystem Household Finance and Consumption Survey. 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.
Note
ISSN:0034-6586
1475-4991
DOI:10.1111/roiw.12279