Is the Top Tail of the Wealth Distribution the Missing Link Between the Household Finance and Consumption Survey and National Accounts?

36 Pages Posted: 22 Oct 2018

See all articles by Robin Chakraborty

Robin Chakraborty

Deutsche Bundesbank

Ilja Kristian Kavonius

European Central Bank; Centre for Consumer Society Research, University of Helsinki

Sebastien Perez-Duarte

European Central Bank (ECB); National Institute of Statistics and Economic Studies (INSEE) - Center for Research in Economics and Statistics (CREST)

Philip Vermeulen

European Central Bank (ECB)

Date Written: October 16, 2018

Abstract

The financial accounts of the household sector within the system of national accounts report the aggregate asset holdings and liabilities of all households within a country. In principle, when household wealth surveys are explicitly designed to be representative of all households, aggregating these micro data should correspond to the macro aggregates. In practice, however, differences are large. We first discuss conceptual and generic differences between those two sources of data. Thereafter we investigate missing top tail observation from wealth surveys as a source of discrepancy. By fitting a Pareto distribution to the upper tail, we provide an estimate of how much of the gap between the micro and macro data is caused by the underestimation of the top tail of the wealth distribution. Conceptual and generic differences as well as missing top tail observations explain part of the gap between financial accounts and survey aggregates.

Keywords: financial accounts, HFCS, wealth inequality, Pareto distribution, households

JEL Classification: C46, D31, E01

Suggested Citation

Chakraborty, Robin and Kavonius, Ilja Kristian and Perez-Duarte, Sebastien and Vermeulen, Philip, Is the Top Tail of the Wealth Distribution the Missing Link Between the Household Finance and Consumption Survey and National Accounts? (October 16, 2018). ECB Working Paper No. 2187. Available at SSRN: https://ssrn.com/abstract=3269146

Robin Chakraborty (Contact Author)

Deutsche Bundesbank ( email )

Wilhelm-Epstein-Str. 14
Frankfurt/Main, 60431
Germany

Ilja Kristian Kavonius

European Central Bank ( email )

Sonnemannstrasse 22
Frankfurt am Main, 60314
Germany
+49-13448417 (Phone)

HOME PAGE: http://www.ecb.europa.eu/pub/research/authors/profiles/ilja-kristian-kavonius.en.html

Centre for Consumer Society Research, University of Helsinki ( email )

Finland

HOME PAGE: http://tuhat.helsinki.fi/portal/en/person/ikavoniu

Sebastien Perez-Duarte

European Central Bank (ECB) ( email )

Sonnemannstrasse 22
Frankfurt am Main, 60314
Germany

National Institute of Statistics and Economic Studies (INSEE) - Center for Research in Economics and Statistics (CREST) ( email )

15 Boulevard Gabriel Peri
Malakoff Cedex, 1 92245
France

Philip Vermeulen

European Central Bank (ECB) ( email )

Sonnemannstrasse 22
Frankfurt am Main, 60314
Germany

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