Correcting wealth survey data for the missing rich: The case of Austria
AbstractIt is a well-known criticism that due to its exponential distribution, survey data on wealth is hardly reliable when it comes to analyzing the richest parts of society. This paper addresses this criticism using Austrian data from the Household Finance and Consumption Survey (HFCS). In doing so we apply the assumption of a Pareto distribution to obtain estimates for the number of households possessing a net wealth greater than four million Euros as well as their aggregate wealth holdings. Thereby, we identify suitable parameter combinations by using a series of maximum-likelihood estimates and appropriate goodness-of-fit tests to avoid arbitrariness with respect to the fitting of the Pareto-Distribution. Our results suggest that the alleged non-observation bias is considerable, accounting for about one quarter of total net wealth. The method developed in this paper can easily be applied to other countries where survey data on wealth are available.
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Bibliographic InfoPaper provided by Department of Economics, Johannes Kepler University Linz, Austria in its series Economics working papers with number 2014-01.
Length: 26 pages
Date of creation: Jan 2014
Date of revision:
wealth distribution; non-observation bias; Pareto distribution;
Find related papers by JEL classification:
- C46 - Mathematical and Quantitative Methods - - Econometric and Statistical Methods: Special Topics - - - Specific Distributions
- C81 - Mathematical and Quantitative Methods - - Data Collection and Data Estimation Methodology; Computer Programs - - - Methodology for Collecting, Estimating, and Organizing Microeconomic Data; Data Access
- D31 - Microeconomics - - Distribution - - - Personal Income and Wealth Distribution
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