Wealth aggregates implied by the Household Finance and Consumption Survey (HFCS) usually yield much lower amounts than macroeconomic statistics reported in the National Accounts. An important source of this gap may be the under-representation of the wealthiest households in the HFCS. This article therefore combines a semi-parametric Pareto model estimated from top survey data and observations from rich lists with a non-parametric stratification approach to quantify the impact of the missing wealthy households on component-specific micro-macro gaps. We find that unadjusted micro data substantially underestimates wealth inequality. The largest effects are documented for equity. For other components, the missing wealthy explain less than ten percentage points of the micro-macro gap. We find that differences in oversampling strategies limit the cross-country comparability of unadjusted survey-implied wealth distributions and that our top tail adjustment leads to measures that are internationally better comparable.
We use data from the Household Finance and Consumption Survey (HFCS), which can be accessed by researchers via a formal request to the ECB. Additionally, we use publicly available National Accounts data and observations from rich lists published by the journals Trend and Manager Magazine. The results published, and the related observations and analyses may not correspond to results or analyses of the data producers.
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We are grateful for comments by Henning Ahnert, Alexander Erler, Pirmin Fessler, Herwig Friedl, Juha Honkkila, Ilja K. Kavonius, Guillaume Osier, Sébastien Pérez-Duarte, Tobias Schmidt, Philip Vermeulen, Caroline Willeke and Michael Ziegelmeyer. We also thank participants in the June 2017 meeting of the ECB Expert Group on Linking Macro and Micro Data for the Household Sector (EG-LMM) at the European Central Bank, the 5th Luxembourg Workshop on Household Finance and Consumption at the Banque centrale du Luxembourg, the November 2017 User workshop of the Eurosystem Household Finance and Consumption Survey at the European Central Bank, the 1st WID.world conference at the Paris School of Economics, the 2nd LIS/LWS Users Conference “The legacy of Tony Atkinson in inequality analysis” in Luxembourg, as well as research seminars at the Deutsche Bundesbank, the Oesterreichische Nationalbank, the University of Graz, and the WU Research Institute Economics of Inequality (INEQ) for fruitful discussions and remarks. All remaining errors are ours.
Open access funding provided by Vienna University of Economics and Business (WU).
Conflict of Interests
There are no further potential conflicts of interest to declare.
We have carried out large parts of this work during our employment at and Sofie Waltl’s subsequent consultancy work for the European Central Bank. This article should, however, not be quoted to represent the views of the ECB, the Deutsche Bundesbank nor any other member of the Eurosystem. The views expressed are those of the authors.
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Waltl, S.R., Chakraborty, R. Missing the wealthy in the HFCS: micro problems with macro implications. J Econ Inequal 20, 169–203 (2022). https://doi.org/10.1007/s10888-021-09519-1
- Distributional National Accounts (DINA)
- Micro-macro linkage
- Semi-parametric Pareto models
- Wealth distribution