Book Review: Inheritance and wealth inequality in Britain

While much recent attention has been paid to the problems involved in estimating the degree of welath inequality in Britain, and policies to reduce it have been the subject of widespread discussion, there is a relative paucity of knowledge about the reasons for its existence and persistence. Some of the best work in this area has been based upon the presumption that there are essentially five sources of wealth inequality among individuals. Older individuals will have had longer to accumulate wealth than younger individuals, and wealth inequality would therefore be anticipated even in a world where individuals have identical earnings and savings at all stages of the life cycle, and face the same rate of return. Differences in earnings, savings and rates of return may change the explained degree of inequality somewhat, though it need not necessarity increase it. Having shown, albeit tentatively, that the aforementioned factors, both singly and taken together, fail to explain much of the observed inequality. However, inheritance only has significance as a residual factor, and it would be reassuring if some direct evidence as to the contribution of differences in inheritances were made available. This book describes the result of a research which may cast some light on this issue.