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Correcting wealth survey data for the missing rich: The case of Austria

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Author Info

  • Paul Eckerstorfer
  • Johannes Halak

    (Government of the Federal State of Upper Austria)

  • Jakob Kapeller

    ()
    (Department of Philosophy and Theory of Science, University of Linz, Linz, Austria)

  • Bernhard Schütz

    ()
    (Department of Economics, University of Linz, Linz, Austria)

  • Florian Springholz

    (Department of Philosophy and Theory of Science, University of Linz, Linz, Austria)

  • Rafael Wildauer

    (Department of Economics, Kingston University London)

Abstract

It 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 Info

Paper provided by Department of Economics, Johannes Kepler University Linz, Austria in its series Economics working papers with number 2014-01.

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Length: 26 pages
Date of creation: Jan 2014
Date of revision:
Handle: RePEc:jku:econwp:2014_01

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Keywords: wealth distribution; non-observation bias; Pareto distribution;

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  1. Robert Guttmann & Dominique Plihon, 2010. "Consumer debt and financial fragility," International Review of Applied Economics, Taylor & Francis Journals, vol. 24(3), pages 269-283.
  2. Facundo Alvaredo & Anthony B. Atkinson & Thomas Piketty & Emmanuel Saez, 2013. "The Top 1 Percent in International and Historical Perspective," NBER Working Papers 19075, National Bureau of Economic Research, Inc.
  3. Peter Hoeller & Isabelle Joumard & Mauro Pisu & Debra Bloch, 2012. "Less Income Inequality and More Growth – Are They Compatible? Part 1. Mapping Income Inequality Across the OECD," OECD Economics Department Working Papers 924, OECD Publishing.
  4. Alvaredo, Facundo & Saez, Emmanuel, 2009. "Income and Wealth Concentration in Spain from a Historical and Fiscal Perspective," Institute for Research on Labor and Employment, Working Paper Series qt4017h9q3, Institute of Industrial Relations, UC Berkeley.
  5. Wilkinson, Richard G. & Pickett, Kate E., 2007. "The problems of relative deprivation: Why some societies do better than others," Social Science & Medicine, Elsevier, vol. 65(9), pages 1965-1978, November.
  6. Kopczuk, Wojciech & Saez, Emmanuel, 2004. "Top Wealth Shares in the United States, 1916-2000: Evidence from Estate Tax Returns," National Tax Journal, National Tax Association, vol. 57(2), pages 445-87, June.
  7. Anthony B. Atkinson & Thomas Piketty & Emmanuel Saez, 2011. "Top Incomes in the Long Run of History," Journal of Economic Literature, American Economic Association, vol. 49(1), pages 3-71, March.
  8. Stanislav Kolenikov, 2010. "Resampling variance estimation for complex survey data," Stata Journal, StataCorp LP, vol. 10(2), pages 165-199, June.
  9. Camillo Dagum, 2006. "Wealth distribution models: analisys and applications," Statistica, Department of Statistics, University of Bologna, vol. 66(3), pages 235-268.
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