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

Robin Chakraborty, Ilja Kristian Kavonius, Sébastien Pérez-Duarte, Philip Vermeulen

Research output: Contribution to journalArticleScientificpeer-review

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 microdata 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 macrodata 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.
Original languageEnglish
JournalJournal of Official Statistics
Volume35
Issue number1
Pages (from-to)31-65
Number of pages35
ISSN0282-423X
DOIs
Publication statusPublished - 26 Mar 2019
MoE publication typeA1 Journal article-refereed

Fields of Science

  • 511 Economics

Cite this

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title = "Is the Top Tail of the Wealth Distribution the Missing Link between the Household Finance and Consumption Survey and National Accounts?",
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 microdata 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 macrodata 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 = "511 Economics, financial accounts, HFCS, wealth inequality, Pareto distribution, households",
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Is the Top Tail of the Wealth Distribution the Missing Link between the Household Finance and Consumption Survey and National Accounts? / Chakraborty, Robin; Kavonius, Ilja Kristian; Pérez-Duarte, Sébastien; Vermeulen, Philip.

In: Journal of Official Statistics, Vol. 35, No. 1, 26.03.2019, p. 31-65.

Research output: Contribution to journalArticleScientificpeer-review

TY - JOUR

T1 - Is the Top Tail of the Wealth Distribution the Missing Link between the Household Finance and Consumption Survey and National Accounts?

AU - Chakraborty, Robin

AU - Kavonius, Ilja Kristian

AU - Pérez-Duarte, Sébastien

AU - Vermeulen, Philip

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AB - 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 microdata 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 macrodata 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.

KW - 511 Economics

KW - financial accounts

KW - HFCS

KW - wealth inequality

KW - Pareto distribution

KW - households

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