Wealth Concentration in the United States Using an Expanded Measure of Net Worth

24 Pages Posted: 9 Jul 2021

See all articles by Alice Henriques Volz

Alice Henriques Volz

Board of Governors of the Federal Reserve System

Lindsay Jacobs

University of Wisconsin - Madison - La Follette School of Public Affairs

Elizabeth Llanes

Board of Governors of the Federal Reserve System; University of Wisconsin - Madison

Kevin B. Moore

Board of Governors of the Federal Reserve System

Jeffrey P. Thompson

New England Public Policy Center, Federal Reserve Bank of Boston

Date Written: April, 2021

Abstract

Defined benefit (DB) pensions and Social Security are two important resources for financing retirement in the United States. However, these illiquid, non-market forms of wealth are typically excluded from measures of net worth. To the extent that these broadly held resources substitute for savings, measures of wealth inequality that do not account for DB pensions and Social Security may be overstated. This paper develops an alternative, expanded wealth concept, augmenting precise net worth data from the Survey of Consumer Finances with estimates of DB pension and expected Social Security wealth. We use this expanded wealth concept to explore the concentration of wealth among households aged 40 to 59 and find that (1) including DB pension and Social Security results in markedly lower measures of wealth concentration and that (2) trends toward higher wealth inequality over time, while moderated, are still present.

Keywords: wealth concentration, saving, Social Security, pensions

JEL Classification: D14, D31, D63, G51, I31, J15

Suggested Citation

Henriques Volz, Alice and Jacobs, Lindsay and Llanes, Elizabeth and Moore, Kevin B. and Thompson, Jeffrey P., Wealth Concentration in the United States Using an Expanded Measure of Net Worth (April, 2021). FRB of Boston Working Paper No. 21-6, Available at SSRN: https://ssrn.com/abstract=3883067 or http://dx.doi.org/10.29412/res.wp.2021.06

Alice Henriques Volz (Contact Author)

Board of Governors of the Federal Reserve System ( email )

20th Street and Constitution Avenue NW
Washington, DC 20551
United States

Lindsay Jacobs

University of Wisconsin - Madison - La Follette School of Public Affairs ( email )

1225 Observatory Drive
Madison, WI 53705
United States

Elizabeth Llanes

Board of Governors of the Federal Reserve System

20th Street and Constitution Avenue NW
Washington, DC 20551
United States

University of Wisconsin - Madison ( email )

716 Langdon Street
Madison, WI 53706-1481
United States

Kevin B. Moore

Board of Governors of the Federal Reserve System ( email )

20th Street and Constitution Avenue NW
Washington, DC 20551
United States

Jeffrey P. Thompson

New England Public Policy Center, Federal Reserve Bank of Boston ( email )

600 Atlantic Avenue
Boston, MA 02210
United States

HOME PAGE: http://https://www.bostonfed.org/people/bank/jeffrey-p-thompson.aspx

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