IDEAS home Printed from https://ideas.repec.org/p/pra/mprapa/125174.html

How Invisible Capital Gains Drive Extreme Wealth Concentration: Evidence from Balance-Sheet-Complete Haig-Simons Accounting

Author

Listed:
  • Roth, Steve
  • Bezemer, Dirk

Abstract

Researchers of income, wealth and inequality have long called for data on total “Haig-Simons” income, which includes accrued capital gains. We integrate NIPA income and saving measures with Integrated Macroeconomic Accounts (IMAs) data to derive an open-access, balance-sheet-complete data set of 1960-2023 “Total U.S. Haig-Simons Household Income Accounts” (THIAs) for U.S. households, with distributional estimates covering 2000-2023. We highlight five trends in this data that all contribute to the increased U.S. wealth concentration since the late 1970s. For instance, 86% of Haig-Simons saving since 2000 accrued to the top 20% of households (by income), driven heavily by asset-price increases, plus top households’ lower and declining propensities to consume.

Suggested Citation

  • Roth, Steve & Bezemer, Dirk, 2024. "How Invisible Capital Gains Drive Extreme Wealth Concentration: Evidence from Balance-Sheet-Complete Haig-Simons Accounting," MPRA Paper 125174, University Library of Munich, Germany.
    • Handle: RePEc:pra:mprapa:125174
    as

    Download full text from publisher

    File URL: https://mpra.ub.uni-muenchen.de/125174/8/MPRA_paper_125174.pdf
    File Function: original version
    Download Restriction: no
    ---><---

    References listed on IDEAS

    as
    1. 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.
    2. Facundo Alvaredo & Bertrand Garbinti & Thomas Piketty, 2017. "On the Share of Inheritance in Aggregate Wealth: Europe and the USA, 1900–2010," Economica, London School of Economics and Political Science, vol. 84(334), pages 239-260, April.
    3. Craig Medlen & Zelin Chen, 2020. "Deficits for the Rich: Inequality and Instability," Journal of Economic Issues, Taylor & Francis Journals, vol. 54(2), pages 517-524, April.
    4. Christian E. Weller & Emek Karakilic, 2022. "Wealth inequality, household debt, and macroeconomic instability," Chapters, in: A Modern Guide to Post-Keynesian Institutional Economics, chapter 5, pages 121-143, Edward Elgar Publishing.
    5. Pedro Salas-Rojo & Juan Gabriel Rodríguez, 2022. "Inheritances and wealth inequality: a machine learning approach," The Journal of Economic Inequality, Springer;Society for the Study of Economic Inequality, vol. 20(1), pages 27-51, March.
    6. Dirk J Bezemer, 2021. "Minsky’s legacy: two strands," Cambridge Journal of Economics, Cambridge Political Economy Society, vol. 45(2), pages 391-409.
    7. Mehrling, Perry, 1999. "The vision of Hyman P. Minsky," Journal of Economic Behavior & Organization, Elsevier, vol. 39(2), pages 129-158, June.
    8. Emmanuel Saez & Gabriel Zucman, 2020. "Trends in US Income and Wealth Inequality: Revising After the Revisionists," Working Papers halshs-03022102, HAL.
    9. Fisher, Jonathan D. & Johnson, David S. & Smeeding, Timothy M. & Thompson, Jeffrey P., 2020. "Estimating the marginal propensity to consume using the distributions of income, consumption, and wealth," Journal of Macroeconomics, Elsevier, vol. 65(C).
    10. Richard Blundell & Luigi Pistaferri & Itay Saporta-Eksten, 2016. "Consumption Inequality and Family Labor Supply," American Economic Review, American Economic Association, vol. 106(2), pages 387-435, February.
    11. Kosta Josifidis & Novica Supic, 2016. "Income Inequality and Workers’ Powerlessness in Selected OECD Countries," Journal of Economic Issues, Taylor & Francis Journals, vol. 50(2), pages 424-434, April.
    12. Chan, Kenneth S. & Dang, Vinh Q.T. & Li, Tingting & So, Jacky Y.C., 2016. "Under-consumption, trade surplus, and income inequality in China," International Review of Economics & Finance, Elsevier, vol. 43(C), pages 241-256.
    13. Facundo Alvaredo & Bertrand Garbinti & Thomas Piketty, 2017. "On the Share of Inheritance in Aggregate Wealth: Europe and the USA, 1900–2010," Post-Print halshs-01509650, HAL.
    14. Charles Yuji Horioka & Luigi Ventura, 2024. "Do the Retired Elderly in Europe Decumulate Their Wealth? The Importance of Bequest Motives, Precautionary Saving, Public Pensions, and Homeownership," Review of Income and Wealth, International Association for Research in Income and Wealth, vol. 70(1), pages 187-212, March.
    15. Marina Gindelsky, 2022. "Do transfers lower inequality between households? Demographic evidence from Distributional National Accounts," Economic Inquiry, Western Economic Association International, vol. 60(3), pages 1233-1257, July.
    16. Edward N. Wolff, 2024. "Inflation, Interest, and the Secular Rise in Wealth Inequality in the United States: Is the Fed Responsible?," Journal of Economic Issues, Taylor & Francis Journals, vol. 58(1), pages 244-285, January.
    17. Katya Kartashova & Xiaoqing Zhou, 2021. "Wealth Inequality and Return Heterogeneity During the COVID-19 Pandemic," Working Papers 2114, Federal Reserve Bank of Dallas.
    18. Eisner, Robert, 1989. "The Total Incomes System of Accounts," University of Chicago Press Economics Books, University of Chicago Press, edition 1, number 9780226196381, August.
    19. Jeff Larrimore & Richard V. Burkhauser & Gerald Auten & Philip Armour, 2021. "Recent Trends in US Income Distributions in Tax Record Data Using More Comprehensive Measures of Income Including Real Accrued Capital Gains," Journal of Political Economy, University of Chicago Press, vol. 129(5), pages 1319-1360.
    20. Christian E. Weller & Emek Karakilic, 2022. "Wealth Inequality, Precariousness, Household Debt, and Macroeconomic Instability," Journal of Economic Issues, Taylor & Francis Journals, vol. 56(2), pages 599-606, April.
    21. Orazio P. Attanasio & Luigi Pistaferri, 2016. "Consumption Inequality," Journal of Economic Perspectives, American Economic Association, vol. 30(2), pages 3-28, Spring.
    Full references (including those not matched with items on IDEAS)

    Most related items

    These are the items that most often cite the same works as this one and are cited by the same works as this one.
    1. Roth, Steve & Bezemer, Dirk, 2024. "Introducing the THIAs: Total Haig-Simons U.S. Household Income Accounts, 1960–2021," MPRA Paper 121242, University Library of Munich, Germany.
    2. Belloc, Ignacio & Molina, José Alberto & Velilla, Jorge, 2025. "Consumption responses to inheritances: The role of durable goods," Journal of Macroeconomics, Elsevier, vol. 83(C).
    3. Bardóczy, Bence & Savoia, Ettore & Vel´asquez-Giraldo, Mateo, 2026. "HANK Comes of Age: Monetary Policy with Heterogeneous Overlapping Generations," Working Paper Series 461, Sveriges Riksbank (Central Bank of Sweden).
    4. repec:cam:camjip:2507 is not listed on IDEAS
    5. Marcon, Giulio, 2021. "La ricchezza in Italia Rapporto di ricerca [Wealth in Italy. Research Report]," MPRA Paper 107809, University Library of Munich, Germany.
    6. Metzger, Martina & Young, Brigitte, 2020. "No gender please, we're central bankers: Distributional impacts of quantitative easing," IPE Working Papers 136/2020, Berlin School of Economics and Law, Institute for International Political Economy (IPE).
    7. Mauricio De Rosa, 2022. "Accumulation, inheritance and wealth distribution: first estimates of the untold half," Documentos de Trabajo (working papers) 22-07, Instituto de Economía - IECON.
    8. Giacomo Mangiante & Pascal Meichtry, 2025. "On the Distributional Effects of Conventional Monetary Policy and Forward Guidance," Working papers 996, Banque de France.
    9. De Giorgi, Giacomo & Gambetti, Luca & Naguib, Costanza, 2020. "Life-Cycle Inequality: Blacks And Whites Differentials In Life Expectancy, Savings, Income, And Consumption," CEPR Discussion Papers 15182, C.E.P.R. Discussion Papers.
    10. Rolf Aaberge & Marco Francesconi & Jørgen Modalsli & Ola L. Vestad, 2024. "How Business Income Measures Affect Income Inequality and the Tax Burden," CESifo Working Paper Series 11496, CESifo.
    11. Roth, Steve, 2022. "Distributional Haig-Simons Income Accounts for U.S. Households, 2000-2019," MPRA Paper 114524, University Library of Munich, Germany.
    12. Li Sheng & Zhaoyong Zhang, 2022. "Revisiting global imbalances: A comparative analysis of income and consumption inequality," Economics and Politics, Wiley Blackwell, vol. 34(2), pages 382-390, July.
    13. Klaus Prettner & Andreas Schaefer, 2021. "The U‐Shape of Income Inequality over the 20th Century: The Role of Education," Scandinavian Journal of Economics, Wiley Blackwell, vol. 123(2), pages 645-675, April.
    14. Giacomo Giorgi & Luca Gambetti & Costanza Naguib, 2024. "The Black and white differential in income and consumption dynamics," The Journal of Economic Inequality, Springer;Society for the Study of Economic Inequality, vol. 22(4), pages 981-997, December.
    15. Giacomo De Giorgi & Luca Gambetti & Costanza Naguib, 2023. "Life-Cycle Inequality: the Black and White Differential," Diskussionsschriften dp2301, Universitaet Bern, Departement Volkswirtschaft.
    16. S. S. Swathysree & Manisha Chakrabarty & Debopriti Bhattacharya, 2023. "Getting Real in the Real Consumption Expenditure: A Case of Rural India," Journal of Quantitative Economics, Springer;The Indian Econometric Society (TIES), vol. 21(4), pages 817-846, December.
    17. Marek Šedivý & Petr Janský, 2025. "How do regional price levels affect income inequality? Household-level evidence from countries worldwide," The Annals of Regional Science, Springer;Western Regional Science Association, vol. 74(1), pages 1-63, March.
    18. Cavallari, Lilia & D’Addona, Stefano & Porchia, Paolo, 2025. "Demand, wealth inequality and the business cycle," Journal of Macroeconomics, Elsevier, vol. 85(C).
    19. Fatih Elcin, 2024. "Global Consumption Disparities: Unveiling a Persistent Divide," World Journal of Applied Economics, WERI-World Economic Research Institute, vol. 10(1), pages 1-16, June.
    20. Calogero Brancatelli & Roman Inderst, 2025. "CPG consumption in times of recession: novel evidence from matched administrative data," Quantitative Marketing and Economics (QME), Springer, vol. 23(2), pages 265-289, June.
    21. Belloc, Ignacio & Molina, José Alberto & Velilla, Jorge, 2025. "Inheritance Shocks and Expenditure Patterns: A Dynamic Collective Approach," IZA Discussion Papers 18243, IZA Network @ LISER.

    More about this item

    Keywords

    ;
    ;
    ;
    ;
    ;
    ;
    ;
    ;

    JEL classification:

    • B41 - Schools of Economic Thought and Methodology - - Economic Methodology - - - Economic Methodology
    • D31 - Microeconomics - - Distribution - - - Personal Income and Wealth Distribution
    • O11 - Economic Development, Innovation, Technological Change, and Growth - - Economic Development - - - Macroeconomic Analyses of Economic Development

    NEP fields

    This paper has been announced in the following NEP Reports:

    Statistics

    Access and download statistics

    Corrections

    All material on this site has been provided by the respective publishers and authors. You can help correct errors and omissions. When requesting a correction, please mention this item's handle: RePEc:pra:mprapa:125174. See general information about how to correct material in RePEc.

    If you have authored this item and are not yet registered with RePEc, we encourage you to do it here. This allows to link your profile to this item. It also allows you to accept potential citations to this item that we are uncertain about.

    If CitEc recognized a bibliographic reference but did not link an item in RePEc to it, you can help with this form .

    If you know of missing items citing this one, you can help us creating those links by adding the relevant references in the same way as above, for each refering item. If you are a registered author of this item, you may also want to check the "citations" tab in your RePEc Author Service profile, as there may be some citations waiting for confirmation.

    For technical questions regarding this item, or to correct its authors, title, abstract, bibliographic or download information, contact: Joachim Winter (email available below). General contact details of provider: https://edirc.repec.org/data/vfmunde.html .

    Please note that corrections may take a couple of weeks to filter through the various RePEc services.

    IDEAS is a RePEc service. RePEc uses bibliographic data supplied by the respective publishers.