Wealth Portfolios in the UK and the US
In this paper, we attempt to explain differences between the US and UK household wealth distributions, with an emphasis on the quite different porfolios held in stock and housing equities in the two countries. As a proportion of their total wealth, British households hold relatively small amounts of financial assets - including equities in stock - compared to American households. In contrast, British households appear to move into home ownership at relatively young ages and a large fraction of their household wealth is concentrated in houseing. Finally, the age gradient in home equity appears to be much steeper in the UK while US households exhibit a steeper age gradient in stock equity. We argue that the higher price housing price volatility in the UK combined with much younger entry into home ownership there are important factors accounting for the relatively small participation of young British householders in the stock market. We show it is important to acknowledge the dual role of housing - providing both wealth and consumption services - in understanding wealth accumulation differences between the US and the UK. Institutional differences, particularly in housing markets, that affect the demand and supply of housing services, turn out to be important in generating portfolio differences between the two countries. In particular, these differences in housing price risk imply steeper life-cycle accumulations in housing and less steep accumulation in stock equity over the life cycle in the UK.
|Date of creation:||Aug 2002|
|Date of revision:|
|Publication status:||published as James Banks & Richard Blundell & James Smith, 2004. "Wealth Portfolios in the United Kingdom and the United States," NBER Chapters, in: Perspectives on the Economics of Aging, pages 205-246 National Bureau of Economic Research, Inc.|
|Contact details of provider:|| Postal: |
Web page: http://www.nber.org
More information through EDIRC
Please report citation or reference errors to , or , if you are the registered author of the cited work, log in to your RePEc Author Service profile, click on "citations" and make appropriate adjustments.:
- James Banks & Richard Blundell & Agar Brugiavini, 1999.
"Risk pooling, precautionary saving and consumption growth,"
IFS Working Papers
W99/19, Institute for Fiscal Studies.
- Banks, James & Blundell, Richard & Brugiavini, Agar, 2001. "Risk Pooling, Precautionary Saving and Consumption Growth," Review of Economic Studies, Wiley Blackwell, vol. 68(4), pages 757-79, October.
- Chiuri, Maria Concetta & Jappelli, Tullio, 2003.
"Financial market imperfections and home ownership: A comparative study,"
European Economic Review,
Elsevier, vol. 47(5), pages 857-875, October.
- Maria Concetta Chiuri & Tullio Jappelli, 2000. "Financial Market Imperfections and Home Ownership: A Comparative Study," CSEF Working Papers 44, Centre for Studies in Economics and Finance (CSEF), University of Naples, Italy, revised 01 Dec 2000.
- Chiuri, Maria Concetta & Jappelli, Tullio, 2001. "Financial Market Imperfections and Home Ownership: A Comparative Study," CEPR Discussion Papers 2717, C.E.P.R. Discussion Papers.
- James Banks & Richard Blundell & James P. Smith, 2000. "Wealth inequality in the United States and Great Britain," IFS Working Papers W00/20, Institute for Fiscal Studies.
- Steve Bond & Lucy Chennells & Michael Devereux, 1995. "Company dividends and taxes in the UK," Fiscal Studies, Institute for Fiscal Studies, vol. 16(3), pages 1-18, August.
- F. Thomas Juster & Joseph Lupton & James P. Smith & Frank Stafford, 2004. "Savings and Wealth; Then and Now," Labor and Demography 0403027, EconWPA.
- Di Salvo, Pamela & Ermisch, John, 1997. "Analysis of the Dynamics of Housing Tenure Choice in Britain," Journal of Urban Economics, Elsevier, vol. 42(1), pages 1-17, July.
When requesting a correction, please mention this item's handle: RePEc:nbr:nberwo:9128. See general information about how to correct material in RePEc.
For technical questions regarding this item, or to correct its authors, title, abstract, bibliographic or download information, contact: ()
If references are entirely missing, you can add them using this form.